• GOOGLE928.53-3.92 - -0.42%
  • APPLE151.89-1.50 - -0.98%
  • VODAFONE28.64+0.02 - +0.07%
  • France Telecom
  • FACEBOOK170.54-0.57 - -0.33%
  • FTSE100
  • DAX30
  • CAC405281.29+14.00 - +0.27%
  • S&P500
  • australian dollar - us dollar0.7961
  • us Dollar - Japan Yen1.1951
  • euro - us dollar111.9580
  • euro - Pound sterling0.8855
To show sotck chart

What Are Binary Options?

Binary Options Graph

Binary options represent a quite new and exciting type of investment. Unlike other types of trading which imply purchasing the asset, in binary options the investor speculates whether the price of the asset will go up or drop.

Definition

Also known as digital options, fixed return options or all-or-nothing options they are, in essence, a type of trading where the outcome is either a set amount of money of a certain asset or nothing. In other words, when you buy binary options you know from the very start how much you could make of it. They can be bought on various online platforms in either Call/Up option or Put/Down option. Another important aspect is the time. Binary options are given against a fixed time of expiry which could be from couple of minutes to hours or even days.

How The Trading Goes

The best way to explain binary options trading is through the power of examples. Let’s imagine the following situation. You decide upon an asset you want to invest in (e.g. Google) and you buy a 100 dollars option which implies that at the end of the expiry time (e.g. a day) your asset’s shares will be higher than at the moment of buying.

This situation can have only two possible outcomes. The first is that indeed, at the end of the day Google’s shares are higher than at the moment of buying in which case you will get a payout of 165 to 171 dollars, depending on the payout percentage set by the platform. The second possible outcome is that Google shares are lower, in which case you get a refund of 15 dollars (on most platforms).

The Difference between Binary and Regular Options

There is only one notable difference between the two and it refers to the extent to how much you can win or lose. As previously mentioned, binary options are also known as fixed return options, which means that – unlike regular options – they present a much lower level of risk, since the potential gains are not infinite. Although existent, the risk in binary options can be managed by developing strategies of trading.

Why Trade Binary Options?

There are a number of reasons for which you could start trading binary options right now, but the most obvious of all is their simplicity. They are not hard to understand and the process of trading could be completed by anyone; you are aware of your potential gains or losses from the beginning, and you can invest at whatever hour of day or night you please.

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