Binary Option
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What Is A Binary Option?
A Binary Option is a fairly new concept in the United States. In Europe, and around the world binary options have been a popular part of options trading for quite some time. It was only in 2008 that the Securities and Exchange Commission approved listing binary options in the United States.
Recommended Broker ===> Anyoption
(Click Here To See Why)
A Binary Option is a simple investment, simpler than most other kinds of market investments. When investing with binary options you know there are two possible outcomes before you invest. This is why it is called "binary". You will either make a predetermined amount of money, or you will make nothing.
Initially you invest a predetermined amount of money in an option. It is important to note that you never actually buy the stock, commodity, currency pair, or even entire index, which is the underlying asset. When you place the invested amount, you decide whether you want a "call" option, or a "put" option. A "call" option will expire "in the money" if the underlying asset expires above the strike price. Basically, you are saying that the underlying asset is going to go up between the time of your investment, and the expiration time. This can be one hour, one day, or one week later.
Now, a "put" option is the opposite. You will expire "in the money" if the underlying asset expires below the strike price. Expiring "in the money" means you will be paid. The amount of the payoff usually falls between 65% to 81% return. This is also known before the investment is made. If the underlying asset expires "out of the money" you will recieve nothing in most cases. The example below shows the details of an imaginary Binary Options trade.
Recommended Broker ===> Anyoption
(Click Here To See Why)
A Binary Option is a simple investment, simpler than most other kinds of market investments. When investing with binary options you know there are two possible outcomes before you invest. This is why it is called "binary". You will either make a predetermined amount of money, or you will make nothing.
Initially you invest a predetermined amount of money in an option. It is important to note that you never actually buy the stock, commodity, currency pair, or even entire index, which is the underlying asset. When you place the invested amount, you decide whether you want a "call" option, or a "put" option. A "call" option will expire "in the money" if the underlying asset expires above the strike price. Basically, you are saying that the underlying asset is going to go up between the time of your investment, and the expiration time. This can be one hour, one day, or one week later.
Now, a "put" option is the opposite. You will expire "in the money" if the underlying asset expires below the strike price. Expiring "in the money" means you will be paid. The amount of the payoff usually falls between 65% to 81% return. This is also known before the investment is made. If the underlying asset expires "out of the money" you will recieve nothing in most cases. The example below shows the details of an imaginary Binary Options trade.
Example:
This is an example that uses the imaginary stock "ABC". The value of the stock, and the amount invested are fabricated for informational purposes only.
Call Option For ABC with 72% Return:
Amount invested: $100
Value of ABC at Strike Point: $44.25
Possible Outcomes:
Value of ABC at Expiration> $44.25 - Investor receives $172
Value of ABC at Expiration< $44.25 - Investor receives $0
Put Option For ABC with 72% Return:
Amount invested: $100
Value of ABC at Strike Point: $44.25
Possible Outcomes:
Value of ABC at Expiration> $44.25 - Investor receives $0
Value of ABC at Expiration< $44.25 - Investor receives $172
This is an example that uses the imaginary stock "ABC". The value of the stock, and the amount invested are fabricated for informational purposes only.
Call Option For ABC with 72% Return:
Amount invested: $100
Value of ABC at Strike Point: $44.25
Possible Outcomes:
Value of ABC at Expiration> $44.25 - Investor receives $172
Value of ABC at Expiration< $44.25 - Investor receives $0
Put Option For ABC with 72% Return:
Amount invested: $100
Value of ABC at Strike Point: $44.25
Possible Outcomes:
Value of ABC at Expiration> $44.25 - Investor receives $0
Value of ABC at Expiration< $44.25 - Investor receives $172
The simplicity, and full knowledge of what will be gained or lost are the key features of the binary option. You know going in how much money you stand to gain, or lose. There is less research involved with trading binary options because one only needs to know what the trend of a particular stock, commodity, index, or currency pair is, in the desired time period. This is not to say a profit, with a binary option, is easy to achieve. While the span of the research may be much narrower, it is also even more important. The possibility of losing your entire investment in an hour is not something to go into lightly. Having said that, with the proper market research, a binary option is a simple investment where you can receive short term returns much greater than most other types of investments.
It is easy to start investing with binary options. There are four major platforms out there for binary option trading. They are:
Anyoption
EZtrader
Binarix Trading
StartOptions
Anyoption
EZtrader
Binarix Trading
StartOptions
I want to take this opportunity to remind you, again, that this is a way of investing money. It carries risk, just like any other investment. In order to succeed, you will need to do the proper market research of the underlying asset on which you plan to base your investment. You will not be guaranteed to make a profit, and a loss is very possible.
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