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In financial terms, binary option is defined as an option in which there is either a certain amount of profit in relation with the value of an asset, or a certain loss of the value invested, if the option finishes out of the money. Due to the fact that the trade can only have two possible results, this type of option is called to be binary option. Other generic names for binary options are: digital options, all or nothing options, Fixed Return Options (FRO – used especially in the USA).
At the moment you decide to buy an option, the final result – with the two possible endings – is known from the start.
In the classic trading, you must focus on certain assets and hope that at the end of the day their value increases and you make a small profit.
Let’s say you decide to buy 10 tons of coal on the commodity market with a price of 80 USD per ton. This is an 800 USD investment. By the end of the trading session, if the price is 85 USD, you win a profit of 50 USD. In the binary options trading what you need to do is to predict the trend of the price, or the level it hits. If, let’s say, if you predict the price for the same quantity and you now that you will have a 70% profit assured, all you need to do is determine if the price will go up (and then you place a CALL option) or down (when you place a PUT options). The expiry time of the option can be from 1 minute to 1 month. Therefore, you don’t need to wait much. Let’s say you invest 1,000 USD and predict that the price will increase (call option) and the expiry time is 1 hour. If after one hour the price rises to 85.01 USD, than you make 70% profit, which means 560 USD net profit. If the price is 84.99 USD, you lose your 1,000 investment.
Binary options trading are very simple and easy to understand by everybody. The profits can be very attractive and the outcome is clear. In a few transactions on a good day, you can earn the same amounts as on the traditional market, but the big difference is that you can make profit either the price goes up or down, you just need to predict it correctly.
| Broker | Bonus | Min Deposit | Payout | US Traders | Review | Open Account |
|---|---|---|---|---|---|---|
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