Binary options approved for trading on the market since 2008.There are two types of binary options , the first one is put options and the second one is call options.
When you buy call options, you are betting that the price of the underlying security rises above the strike price on the option. If this happens when the option expires, it is known as “in the money” and you can receive your payout.
The opposite of a call option is a put option. When you buy a put option, you are hoping that the underlying security falls below the strike price of the option. If this happens, the option is in the money and you will receive your payout that was agreed upon in the option contract.
Binary options are an alternative for speculating or hedging but come with advantages and disadvantages. The positives include a known risk and reward, no commissions, innumerable strike prices and expiry dates, access to multiple asset classes in global markets and customizable investment amounts. The negatives include non-ownership of any asset, little regulatory oversight and a winning payout which is always less than the loss on losing trades. Traders who use these instruments need to pay close attention to their individual broker’s rules, especially regarding payouts and risks, how expiry prices are calculated and what happens if the option expires directly on the strike price. Traders should read through all the brokers’ information, and be aware of all risks before making trades.
Binary options are high return, short term investments traded by both professional traders and amateurs. Based on exotic options, which are only traded on private markets, binary options are traded over the counter and available 24 hours a day, 6 days a week.
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Collected information from :
binaryoptions.net
investopedia.com
cedarfinance.com
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