What is Binary Options?

What is Binary Options?

What is Binary Options? In the financial world binary options is a type of option that has only two possible outcomes. Basically the trader must choose if, the targeted asset will be above (CALL) or below (PUT) the current strike rate price, after certain time expire. For example if, the trader put 100$ on Call of the asset EUR/USD from strike rate 1.0650 for 1 hour expiry if, the price is above that price no matter how far even 1.0651, he/she will profit from 75% to 95% depending on the Broker’s payout rates.

Binary options trading is also suitable for those who are new in the world of finance, because they can’t get into debt if they lose. Only the capital that they decide to invest at the given moment is at risk and there is no possibility of overdrawing their current trading-account balance.

Each option has a time of expiry (expiration). The period in which an option expires may differ – from 30 seconds to several hours. The trader is not as interested in the price trend during the trading as he is in the price at its end. Once the option expires, we learn the closing price, and if it is as predicted, profit is gained.

Binary options are appealing as they are both simple to understand and yet offer the potential for high payouts. Most are based on a simple ‘higher’ or ‘lower’ forecast of where you expect the price of an asset to end at the agreed expiry time. All the trader has to do is select the asset, contract duration and the direction that they expect the price to move. They then decide how much they wish to wager on the outcome. A correct prediction wins the payout.

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