Binary Options and Binary Options Trading

Binary Options Trading is when a buyer enters into a contract to purchase an underlying asset at a fixed price at a pre-determined time in the future. The owner does not buy the asset itself, rather the option to buy it. The fixed price at which the owner buys or sells at, is known as the strike price.

In binary option trading, the potential gain or loss is known at the onset of the contract and it is determined by the amount invested by the owner. So, there are only two possible outcomes: or the option expires in-the-money and the owner receives a 65-71% payout; or the option expires out-of-the-money and the owner receives nothing. However, if binary option trading is carried out with anyoption™, an owner receives a 15% payback if his option expires out-of-the-money.

There are 3 aspects to the trade: the underlying asset, the expiry time and the direction the asset will move in.

The underlying asset is the item which is being traded. This could be a range of products: currencies (e.g. USD/GBP), commodities (e.g. Oil, Gold), stocks (e.g. Microsoft, Coca Cola) or indices (e.g. Nasdaq, FTSE 100).

The expiry time is the pre-determined time which defines the option’s end. The option can end at the end of the hour, day, week or month.

The direction the asset will move can either be up (known as a call option) or down (known as a put option). A buyer purchases a call option, if he thinks that by the expiry time, the asset will be above the strike price. He places a put option if he believes that by the expiry time, the asset’s price will be below its strike price.
This makes binary option trading very flexible.

The buyer can control the asset, expiry time and predicted asset direction. Due to the fixed return nature of options, the buyer also knows the potential gain or loss from the trade – he must only wait so see the direction the asset will move in.

A buyer can trade binary options on an online options trading platform such as anyoption™ which is a new binary option trading platform available for private and institutional investors worldwide. It is 100% web based, and does not require software download or any other previous trading experience. The interface is self explanatory and easy to use, the range of assets that options are offered on is incomparable and the speed and accuracy of settlements is flawless. The most advanced and stable technologies are used to ensure the safety and satisfaction of traders.

This means that anyone can start trading immediately. Just open an account with anyoption™, deposit money and follow the simple process:

1. 1.Select the currency pair which will be traded on e.g. USD/EUR, GBP/JPY.
2. 2.Choose the investment amount for the selected binary option. This can be anything from $50 to $3,000 (or equivalent), though multiple trades can take place simultaneously.
3. 3.Decide if the asset is likely to increase or decrease. If increase then select a call option, if decrease then select a put option.
4. 4.Choose an expiry time –end of the hour, day, week or month

All a buyer must do is then wait for the expiry level of the chosen binary option to be finalized and displayed in the trading box. If the option expires in the money then the buyer makes between 65%-71% profit. If the option expires out-of-the-money then he receives a 15% payback of the initial investment.

There are several reasons why trading in binary options is rising in popularity:

1. 1.The risk involved is totally controlled and known by the option buyer. Should the option expire out-of-the-money, he will only lose 85% of his investment amount.
2. 2.There must only be an incremental change in asset price for the buyer to profit - a move of only a 4th decimal point can render the option in-the-money and yield profits for the buyer
3. 3.A buyer does not need in-depth knowledge of the market in which he’s trading – he requires a sense of direction of an asset, since magnitude of the asset movement is not important
4. 4.Binary option trading is extremely flexible, with a buyer able to select the asset, expiry time and price direction to suit his needs