Binary options – are such options that bring a fixed profit or nothing at all. Everything depends on the conditions meeting during the option’s effective period.
Standard types of the binary options include such options as “above” and “below”; sometimes they are called “put” or “call” (this option type is widely used by most companies which trade such option types).
Binary options are perfect for short-term trading and have a high potential for getting profit during one trading day with a minimum risk. Buying binary options a trader does not pay an option bonus or commission fee. All costs from a deal are covered by the market spread.
Due to binary options a trader can divine a certain result.
Binary options’ prices can be extremely volatile even if the basic instrument’s price is rather stable. Even an insignificant price change can be determinant in the binary option calculation. That is why each trader should pay particular attention to development of his/her positions concerning binary options.
Advantages of the binary options:
- An ability to get a short-term profit
- A continuous price flow
- Limited risk
- Availability of short and long positions
- A wide range of instruments
- Commission absence
The similarity between binary and ordinary options is that pay-outs are based on the basic asset price at the moment of the contract termination. However, concerning binary options only the direction of change of the asset price, not the amount of this change, is important. The main difference between binary and ordinary options is the scale of probable profit or loss. Trading in binary options is such a trading when the volume and time are known beforehand.
Despite whether a trader is using short-term positions or is hedging his/her portfolio binary options help to gain maximum profit in the shortest terms. That is why binary options are getting more and more popular among traders.