What are Binary options?
Traders can not buy and sell an underling asset of indices,currencies, stocks and commodities in Binary options tradings. Only trade the price direction of underlying assets at a specified expiration time. An investor will fixed gain from “in the money options” and also fixed loss from “out of the money options” in expires. Binary options are “yes or no trades”. A trader can trade based on the contract. A trader can set up an expiry time and can trade the indices or stocks within that particular time.
Commonly the future and option will trade based on the expiry. In future and options we cannot buy or sell the assets of the indices,currencies,stocks and commodity.But trading with the assumption of future price change of the indices and commodity is called as derivatives(future and option). In worldwide every exchange will fix a date as the expiry date. It may be monthly once or twice. But in case of Binary option trading a trader can fix the expiry time from 30 seconds to 365 days and can trade with that. For instance, consider the date as 10 and time as 8 am today and now if the price of the gold is trading at 1400$ and if the trader assume that the price of the gold will go up tomorrow then the trader can buy a call option. I.e the call position will be with you till the next day 11 till 9 am. If the price of the gold is above 1400$ then the trader will gain profit else the whole amount the trader invested for this expiry will be loss. In this way a trader can set the expiry time and can trade in binary option trading. Here the trader has the option of choosing the expiry, according to their wish.
Types of “Binary option trading”
The Binary option will trade in three different types. In whatever name it may trade it will come under these three types. They are call/put, touch/ no touch, inside/outside. In this the call/put can be called as high/low, above/below, rise/fall. All these will trade on minute, hour, day, week, month and year expiry time. Every option will not trade on all the binary broker. Each broker will have different binary option trading with them. Also, all the broker will not have the same expiry time. It may differ from broker to broker.
How many % Returns from binary trading?
There are many binary options brokers in the market, but each broker will provide different returns. For example, there are brokers who will provide 60% to 90% returns. Let us see about binary option broker in another post. The traders should select the binary option brokers who may provide 75% to 95% returns to them.
Which financial instruments available for trade “Binary Options”?
In binary options the trader can trade the index, stocks, currencies and commodities. India’s nifty and some other stocks are trading in binary option in foreign platforms. In binary options, forex instrument is getting traded more.