Binary Options Trading Guide Strategies Brokers

What Are Binary Options?

What are binary options? Close Binary options are a simple and rewarding financial trading product. Binary options deliver a fixed return on every trade which is made, depending on whether the trade was "In The Money", "Out Of The Money" or a "Tie". Binary options - which are also referred to as digital options - are one of the fastest growing financial trading products in the world because their simplicity, together with the certainty which they offer on every trade, makes them an attractive trading tool for many financial investors.

When buying a binary option the potential return it offers is certain and known before the purchase is made. Binary options can be bought on virtually any financial product and can be bought in both directions of trade either by buying a "Call"/"Up" option or a "Put"/"Down" option. This means that an investor can go long or short on any financial product simply by buying a binary option. Binary options are offered against a fixed expiry time which may be e.g. 5-30 minutes in the future, an hour ahead or at the close of the trading day. Binary options once bought cannot be resold before the expiry time is reached.


Compare Binary Option Trading Brokers

TraderXP - Simple Binary Options Trading
TraderXP is the most professional and objective platform for trading Digital Options online. Digital (or Binary) Options are the fastest and most efficient way to convert your financial decisions into substantial profits. TraderXP is an innovative consumer trading company offering clients an easy and intuitive way to trade on leading financial markets - Forex, Commodities, Indices or Stocks. Since starting business, we have built a loyal base of customers by drawing upon our expertise to provide exceptional software and services for trading Digital Options.

Option Trading Made Easy
EZTrader allows you to invest in Binary Options. You can gain up to 75% return in less than an hour when the option expires in the money. Choose an option to trade from the list of available options. Choose the type of trade: either CALL or PUT. Call means that you estimate the price at the time of expiration will be higher than the current price. Put means that you estimate it will be lower. Enter the amount you would like to trade. you can change the trade type from CALL to PUT or vice-versa even after entering an amount. Click 'Trade' to execute your trade.

Binary Options Trading Platform
Our trading platform is based on the advanced client-side technology of TradeSmarter, a provider of powerful, user-friendly trading technologies. TradeSmarter binary options platform is completely web-based, free of any download that can be accessed from any computer with an internet connection. The system has been developed using the most advanced and stable technologies, enabling us to offer the markets most reliable, secure and robust binary options platform.

Binary Digital Options Trading Platform
WinOptions.comT - binary digital options trading platform allows everyone to trade. If you don't have any financial background or you are sophisticated investor that looking for ways to hedge your positions in the traditional market, or a day trader looking for some "action" without risking large amounts of money, WinOptions.comT Trading Platform is suitable for everyone's goals.

Online Binary Options Trading Broker
Binarix Trading has revolutionized the way binary options are traded on the internet today, by supplying its customers with a simple, exciting, dynamic and highly profitable trading platform, very different from traditional option trading. Due to the simplicity and speed of our binary options trading system and the low minimum investment amount, Binarix Trading is able to reach investors with different profiles all over the world. Ranging from sophisticated investors that are looking for ways to hedge their positions in the traditional market, to amateur day traders looking for some "action" without risking large amounts of money, Binarix Trading developped a system suitable to most of everyone's goals.

Binary Options Trading
OptionBit is a premier option trading platform that provides investors and traders the ability to trade stocks, currency pairs, commodities and indices on the exotic options market. Our unique trading platform was designed to be easy to use, while still being powerful enough to give traders unique money management features found no where else online. We are currently the only options trading platform on the market that offers traders and investors three unique types of binary option to trade: Above / Below, Touch and Range. We also offer unique trading tools like close and Extend, which give traders ability to close their options before the time of expiration or automatically extend the time of expiration after buying the option.

Binary Options Trading in Detail

Binary options are a simple and rewarding financial trading product. Binary options deliver a fixed return on every trade which is made, depending on whether the trade was "In The Money", "Out Of The Money" or a "Tie". Binary options - which are also referred to as digital options, are one of the fastest growing financial trading products in the world because their simplicity, together with the certainty which they offer on every trade, makes them an attractive trading tool for many financial investors.

When buying a binary option the potential return it offers is certain and known before the purchase is made. Binary options can be bought on virtually any financial product and can be bought in both directions of trade either by buying a "Call"/"Up" option or a "Put"/"Down" option. This means that an investor can go long or short on any financial product simply by buying a binary option. Binary options are offered against a fixed expiry time which may be e.g. 5-30 minutes in the future, an hour ahead or at the close of the trading day. Binary options once bought cannot be resold before the expiry time is reached.

Introduction to Binary Options

A binary option is an option that pays either a fixed amount or nothing, depending on whether a certain condition is fulfilled when the option expires.

Binary options are also referred to as all-or-nothing options, since it is a type of option where the payoff is all or nothing. The return is therefore fixed and it comes to no surprise that such options are also known as: FRO's-Fixed Return Options. Digital options is also another commonly used term. More simply a trader just needs to make a decision about the direction of a rate change: whether the underlying asset's price is going up or going down without taking other factors into consideration.

Binaries are considered to be one of the simplest trading products out there, The trader knows at the time of the trade what is the maximum profit and loss.

Binary Options trading is considered as one of the fastest growing segments of the simplified trading products.

Binary options are fixed-odds-return investment products that have two possible absolute outcomes with structured reward and risk, hence the word 'binary'.

Binaries are considered as a mass market financial instrument as it empowers traders with a very flexible trading approach without the complexities involved in trading traditional vanilla options.

Whether you are looking for a short term speculation or hedging your portfolio, binaries can help you get a high payout within short trading durations as so, binaries are gaining popularity among traders globally.

Binary contracts are available on a variety of underlying assets: Stocks, Commodities, Currencies and Indices.

Whether the trader has made a call or put, if at contract expiration the trader has been successful with regards to the anticipated direction of the underling asset price then the contract will expire in the money. On the other hand, if the trader has been unsuccessful in anticipating the direction of the asset, the contract will expire out of the money.

When the expiry level is equal to the strike price the contract will expire at the money. Normally, there will be a fixed cash settlement to be returned which is often the initial investment, however this depends on what was predetermined and agreed in the contract.

A Binary Option reflects specific speculation in financial markets that may happen during a specific time period.

For example: Google price is now 430.25 and you want to speculate on the price movement of the share within a time frame of 1 hour.

If you think that Google will rise above this price level, than you should buy a binary call option, if the Google price will be above the current price level during expiry than the option will expire in the money, paying you the fixed odds return promised during the trade. If not, the option will expire out of the money.

If you think that Google will fall below this price level, than you should buy a binary put option- if Google price will be below the current price level during expiry than the option will expire in the money, paying you the fixed odds return promised during the trade. If not, the option will expire out of the money.

Difference between Binary and Vanilla Options

Binary options also known as digital options are similar to ordinary options in the sense that the payoff is based on the price of the underlying asset when the contract expires, however with a binary option only need to take a view on the anticipated direction of the underlying asset price and don't have to take magnitude into consideration. The main difference between a regular vanilla option and a digital option is the extent to how much a contract can potentially lose or gain. Binary options often referred to as FRO fixed rate options since the contract will have predetermined percentage of fixed rate of return, unlike traditional vanilla options which are much riskier since the potential gains are infinite of course risk can be managed by strategical stop loss orders.

Binary Options Vs Traditional Options Comparison

Vanilla Options Vs. Binary Options

Expiration:

Traditional Options: Once a month.

Binary Options: Variety of expiration terms: end of day, hourly and Even shorter expiration like 15 min binaries.

Payout:

Traditional Options: Dynamic, based of the underlying asset price.

Binary Options: Fixed.

In-The-Money:

Traditional Options: Requires a relation of the strike price of an option and the underlying price in order to execute the option.

Binary Options: Price movement isn't relevant, just the direction (above or below).

Execution:

Traditional Options: Options usually can be exercised any time prior to expiry.

Binary Options: Can't be exercised before expiry.

Right to buy:

Traditional Options: The option owner has the right to exercise his options and turn them into stocks in case option expires 'In-the-money'.

Binary Options: Don't have the right to exercise to stocks.

Advantages of Binary Options

Simplicity-Whether the instrument will close above or below?

. Binary options are simple to understand and straight forward to trade.

. The trader only needs to consider the direction of the asset price. Limited risk and predetermined payout

. The payoff of a binary option contract is fixed and pre-determined so therefore the potential risk and reward is known from the outset. Whereas with traditional options there are no outlined parameters so the possible loss or gain is not known.

. The binary option will settle the contract irrespective of how much the asset price is 'In the money' at expiration. Therefore even if the contract is only successful by one tick the contract still pays out at the fixed level.

. Simplified hedging your portfolio

. Binary options are often used as an effective tool to hedge existing positions. As a product Binary options are compatible to most commonly used trading methods and strategies. Also with binary options its possible to offer a a greater selection of short-term contracts across all markets, which enables the intra-day trader to trade more frequently.

. As opposed to vanilla options, While trading binary options the options can close 'in the money 'collecting the full payoff even with a minimal price change of a single tick.

. Binary options are issued 24/7, allowing traders to trade on multiple time frames. As binaries are on a variety of global underlying assets from different exchanges traders are now able to trade binary options 24/7 under the same binary options platform.

Binary Options Trading Strategies

A very common strategy is to make a pull or call option once there has been a big move in the market especially if it is an unexpected move.

Often binary options' traders will open positions related to events that historically have a big influence on market prices. Fox example quarterly profit or loss announcements from firms are eagerly watched by potential traders and betters, since positive or negative results often reflect the movement of the share prices. As well as formal preplanned announcements traders will always be watching the news, as many different events can influence the markets i.e. Natural disasters to political changes. Eventually the best strategies come with experience which cant be taught.

Binary Options in Global Financial Markets

Binary options falls under the umbrella of exotic options but within financial market they are often referred to as digital options.

Whilst digital options are very simple to understand and easily traded the calculations behind the pricing is sophisticated, its for this reason digital options are known as an exotic option.

Digital options are usually traded OTC (over the counter) across all assets in financial markets but more commonly used within the Forex and Interest markets. More recently numerous stock exchanges have produced listed digital options on selected stocks, commonly known as FRO fixed return options. Today the CBOE offers fixed return options on S&P500 and VIX, also 20 stocks were listed on the AMEX in 2008.

   
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