- Binary Option Trading Explained
- Example of a Typical Binary Option Trade
- Continue Reading...
- What are the Main Types of Binary Options?
- What Assets can be Traded using Binary Options?
- Binary Options: Trading or Gambling?
- Binary Options & Trading Robots: A Perfect Match?
- Is Binary Options Trading a Scam?
- IQ OPTION 2019 Learn How I Made 14K with 100$ in 7 Minutes - Binary Options Newest Method
- How to Select a Binary Options Broker?
- Binary Options: Calculating Breakeven Win-Rate for a Given Payout
- From Around The Web
Binary Option Trading Explained
Also known as digital options or fixed-return options, binary options belong to a special class of exotic options in which the payoff is either a fixed predetermined amount or nothing at all.
For the common high-low binary option, the trader buys a binary call option if he thinks the price of the underlying asset will go up above the current market price or if he thinks the underlying asset price will go down, then he will buy a binary put option.
If his assessment is correct, he will receive a payout.
Otherwise, he loses the initial investment.
As binary options have fixed returns, it doesn’t matter how high or how low the price of the underlying has moved past the strike price. The payout is also fixed and known prior to entering the trade.
Also important to note is the fact that the payout for a successful binary trade is usually only about 70% to 80% of the investment put into the trade.
Binary options also typically have very short expiration times ranging from as fast as 60 seconds to just a few weeks.
Example of a Typical Binary Option Trade
A binary options brokerage is offering 85% payout for the binary call option on EUR/USD which is currently trading at $1.30.
After tracking the price movement of EUR/USD for the past hour, a binary option trader believes that the price will rise over the next 5 minutes and decides to invest $100 to purchase a binary call option on EUR/USD expiring in the next 5 minutes.
If EUR/USD goes up to say $1.31 five minutes later, the investment pays off and the traders earns a profit of 85% of his initial investment, which is $85.
However, if the price of EUR/USD drops down to say $1.29 instead, the trader will have lost his initial investment of $100.
Note that it does not matter whether the price of EUR/USD skyrocketed up to $1.40 or flash crashed below $1.00, both the profit and loss will be fixed at $85 and $100 respectively.
What are the Main Types of Binary Options?
Learn how the One-Touch, No-Touch and Range/Boundary binary options differ from the common high-low viety and how to trade them...[Read on...]
What Assets can be Traded using Binary Options?
Many of the most popular financial instruments such as currency pairs, equities and commodities are available to trade using binary options.
Binary Options: Trading or Gambling?
Is binary option a legitimate financial instrument or just another form of gambling....[Read on...]
Binary Options & Trading Robots: A Perfect Match?
Unlike humans, robots have no emotion and do not need to rest, so they can make a lot more trades than humanly possible, combined with perfect consistency....[Read on...]
Is Binary Options Trading a Scam?
Learn how you can get scammed when trading binary options if you are not careful...
IQ OPTION 2019 Learn How I Made 14K with 100$ in 7 Minutes - Binary Options Newest Method
How to Select a Binary Options Broker?
With so many scam brokers out there, before you learn how to trade, one must know how to separate the wheat from the chaff and find a trustworthy binary options brokerage....[Read on...]
Binary Options: Calculating Breakeven Win-Rate for a Given Payout
How often does my trades need to be successful in order to be consistently profitable in the long run when trading binary options?....[Read on...]