What Are Binary Options?
Binary options is a simple and profitable option that is ideal for both novice and expert traders. Also known as all-or-nothing options, it literally means that either you get a fixed amount or nothing at all contingent to whether a certain condition is met after an expiry period. Basically what you need to do is to predict the price movement or direction of an asset by a specified time. The assets can be in the form of stocks, commodities, indices and forex which come in different varieties. However, this does not mean that you will be the owner of an asset since you will only be predicting the price movement of that asset. It is considered to be one of the fastest growing trading products as it offers simplified methods of making trades wherein anyone who wishes to engage in this type of process is already aware of the possible profit and loss that you can get even before the time of the trade. It is also an ideal financial instrument for the mass market where it offers a more simplified approach minus all the intricacies of the traditional method.
With the use of trusted and reliable platforms , you simply select the asset you want to trade and choose either Call if you believe the asset price will go up or Put if you believe that the price will go down after the expiry period. For example, the price of an Apple stock is traded at $351.25 and you decide to guess its price movement with an expiry period of 1 hour. If you believe that Apple’s value is going to rise then you need to purchase a call option. Otherwise, you buy the put option if the price will fall below its current value. It’s as simple as that. All you need to do is to know the latest buzz and updates about the company which will practically give you an idea on how the price movement is going to be. If you see in the news that they will launch a new iPhone and that it is greatly anticipated by the public then there’s a high probability that the price direction is going up thus the need to buy a call option. Regardless of how much the price of an asset has changed, what only matters is the direction of the price movement and there are only two choices: up or down, hence the term binary. If your forecast is correct and the price of an asset moves just the way you predicted it then you get a fixed profit based on an agreed percentage or rate of your investment.
The new age of online trading
This method is the same as Traditional Options where the payout is dependent on the price of the underlying asset after an expiry period but the bigger advantage is that you don’t need to consider the price direction and not the magnitude of it. With this kind of method, you can set the expiration period to an hour, a day, a week or a month while the traditional method only have monthly expirations which are riskier. Payments are with this type of method are fixed so you already know what possible amount you can get if your guess is correct but with the traditional method, the payments will be based on the price of the underlying asset.