A binary option is a trade with two possible outcomes, based on an asset, where the price, expiration, and payout are fixed at the start of the contract.
Here we have summarized 12 most frequently asked questions regarding to Binary Option investment.
- How did Binary Options trading start?
- What is Touch Trading in Binary Option?
- What is Range Trading in Binary Option?
- What is 60 second binary option trading?
- What Are Digital Options in Binary?
- What is a Hi (Up) binary option?
- What is a Low (Down) binary option?
- What is out-of-the-money in Binary Option?
- What is in-the-money in Binary Option?
- What is at-the-money in Binary Option?
- What is the expiry time in Binary Option?
- What is the expiry time in Binary Option?
Find your answers here and get to know more about this financial product.
1. How did Binary Options trading start?
Binary Option Trading is a relatively new form of financial trading which has seen tremendous growth and success.
Binary Options, also called Digital Option Trading became legal in 2007 with the OCC (Option Clearing Corporation) passing a rule with the SEC (Securities Exchange commission) allowing binary options to be traded over the counter in the major markets around the world.
Before 2007, Binary Options were extremely complicated to trade and were part of major contracts traded thru Licensed Brokers.
When law was passed to regulate binary options, the market rapidly expanded becoming a widespread way of trading for both experienced and new traders.
Digital option trading, as it was first called later took over the name Binary Option trading, became popular because of its easy way to make profits without having to be an expert in the financial market.
Finally, with new easy to use binary trading platforms more and more people are taking advantage of this amazing opportunity they have in the market today.
2. What is Touch Trading in Binary Option?
Touch trading is a version of trading that, without difficulty, can be studied and applied by experienced traders as well as newcomers.
The principle is quite simple – a trader must predict if an asset will touch an established price before the expiry time.
If a trader makes the correct prediction and the price of the underlying asset touches the established price before the expiry time, the trader is in-the-money.
Consequently, the trader will receive the predetermined payout.
3. What is Range Trading in Binary Option?
Range trading is a version of binary option trading that, without difficulty, can be studied and applied by experienced traders as well as newcomers.
The principle is quite simple – a trader must predict if the price of an underlying asset will be inside or outside an established price range at the expiry time.
If the trader’s prediction is correct, the trader is in-the-money.
Example #1 – A trader buys a range option for the USD/EUR pair which at the time of purchase is trading at 1.25.
The offered range is between 1.15-1.30.
The trader believes the underlying asset will be in the neighborhood of 1.26-1.27 at expiry time and purchases an in-the-range option.
At expiry time, the underlying asset was at 1.22.
Consequently, the trader was in-the-money.
Example #2 – A trader buys a range option for the USD/EUR pair which at the time of purchase is trading at 1.25.
The offered range is between 1.15-1.30.
The trader believes the underlying asset will be in the neighborhood of 1.26-1.27 at expiry time and purchases an in-the-range option.
At expiry time, the underlying asset was at 1.10.
Consequently, the trader was out of the money.
4. What is 60 second binary option trading?
60 second binary trading provides the fastest way to trade on the web.
It offers traders the chance to invest money and earn profits in just ONE minute.
Our platform’s advanced technology make it possible for Option brokers to provide this groundbreaking method of binary options trading to the marketplace.
Traders looking for fast-paced, highly energetic trades should choose this investment approach.
Simply select the asset and the investment amount.
Next decide if the asset will go Up or Down and 60 seconds later if you are in-the-money you will have made a big profit ranging from 60% to 85% of your investment. It’s that easy!
5. What Are Digital Options in Binary?
Digital Options are the most popular type of binary options traded on a daily basis (based on cash-or-nothing binary option trading).
Digital options (call/put) have achieved the status of the “most popular” binary options that are being traded.
With these options, a trader must predict if the price of the underlying asset at expiry time will be above (CALL) or below (PUT) a predetermined price.
In practice, this means that if a binary option trader thinks the price of the underlying asset at expiry time will increase, the trader will purchase a Call option.
On the flip side, if a trader thinks the price of the underlying asset at expiry time will decrease, the trader will purchase a Put option.
It is important to remember that there is a fixed payout if the trader is correct and finishes the trade in-the-money.
If the price of the underlying asset at expiry time remains the same as it was at the time of purchase, the trader finishes at-the-money and the purchase price is returned to the trader’s account.
6. What is a Hi (Up) binary option?
A Hi option earns you a profit when the asset price at expiry time is higher than the purchase price.
For Ex: If you buy Google (GOOG) at 618.48 at 10:00 AM and choose that it will be higher than 618.48 at 11:00 AM.
If it is higher than 618.48 at 11:00 AM – you have made a profit.
7. What is a Low (Down) binary option?
A Low option earns you a profit when the asset price at expiry time is lower then the purchase price.
For Ex: If you buy Google (GOOG) at 618.48 at 10:00 AM and choose that it will be lower than 618.48 at 11:00 AM.
If it is lower than 618.48 at 11:00 AM – you have made a profit.
8. What is out-of-the-money in Binary Option?
In the case of a ‘Hi’ option out-of-the-money means that the asset price closed below the purchase price.
A ‘Low’ option is out-of-the-money when the asset price closes above the purchase price.
A ‘Hi’ or ‘Low’ option that is out-of-the-money will result in a loss to the trader.
9. What is in-the-money in Binary Option?
In-the-money means that in the case of a ‘Hi’ option the asset price closed above the purchase price.
A ‘Low’ option finishes In-the-money when the asset price closes below the purchase price.
A ‘Hi’ or ‘Low’ option that is in-the-money will earn the trader a profit.
10. What is at-the-money in Binary Option?
At-the-money is when the asset price closes at the same price it was purchased.
In this case, the full purchase amount will be returned to you.
11. What is the expiry time in Binary Option?
The expiry time is the pre-determined time that an option ends with the result of in-the-money or out of-the-money.
12. What is the expiry date in Binary Option?
The expiry time is the pre-determined date that an option closes with the result of in-the-money or out of-the-money.
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Comment by Diletta
March 26, 2024
Awesome bonuses, good leverage. A few hiccups, but support rocks!