Binary Options


What is Binary Options?


A binary option is a type of derivative option where a trader makes a bet on the price movement of an underlying asset in near future for a fixed amount. Dictionary meaning of ‘binary’ suggests where a moment involves two or composed of two, in simple terms it can be expressed as true/false, yes/no or 0, 1 i.e. there are two outcomes. Similarly in binary option a trader has to bet on any one out of two options ‘buy/sell’ basis two definite outcomes whether an underlying asset price will rise or fall in the near future, for which a trader will earn fixed amount if bet worked in his favor. These are important elements to any binary option:

1) Cash settled

2) Put/call option 3) Expiry Date 4) Underlying Asset and its price 5) Settlement Price Advantages of Binary Options:

  • Simplicity -Trading with binary options is literally just a click away.

  • Accessibility- Since it’s online, you can trade from any internet connected device. With mobile apps provided by brokers, you can trade on the go.

  • Control- Even before you make your first trade, you already know the possible outcomes. The risk and rewards are known so you have better grasp of your next move.

  • Convenience-No need to be bogged down by details such as exiting trades, putting orders, monitoring positions, and the like; your broker and trading app can take care of that.

  • Hassle-free-There are no liquidity concerns since you do not own underlying assets which allows your broker to offer numerous strike prices and timeframes, giving you lots of trading options.

  • No commissions or fees- Brokers generally do not charge commissions or fees for winning trades.



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