In the last few years,there has been a huge increase in binary option trading. In the following text we are going to explain what exactly are binary options, how are they different from regular options, why are they so popular lately and how can you invest in them.
Binary means that there are only two possible outcomes, same as in binary code, you only have two values, zero and one. The same goes for a binary option. There are only two possible outcomes. With a binary option, you have to predict if the option will be worth more or less at some future point in time. That point in time is called maturity date. If you have predicted successfully and the option is worth more at the maturity date, you will get the amount you have invested and the payoff back. If you failed to predict correctly, you will get nothing back. To better illustrate this, here is an example. You buy a binary option saying that some commodity will be worth more at the maturity date. The maturity date is predetermined date and time in the future. You cannot do anything with the option before that date. Let’s say that you have invested 10 000$ in that option, and the maturity date is in 5 minutes. If the option will be worth more in the future, you will get the 10 000$ plus a certain amount, let’s say 70% of the amount you have invested. That means you got 17 000$ back. If the option would be worth less, you would get nothing, or just a small percentage back. Let’s say about 1 500 $. With normal options, you can sell them whenever you prefer. With a binary option, you can only wait and see what the outcome will be. They used to be reserved only for clients such as banks and other financial institutions. They have been made available to the general public since 2008. Since then, everybody that wanted to could invest into these options.
How to invest in binary options
Ever since the options become popular in 2008 there have been a lot of online sites that offered people a chance to invest in these options. The options can be bought for any commodity that is being traded, but usually the sites will have some limitations on which ones can you invest in. Since there is a lot of these sites online, you should be careful who are you investing your money with. Always check for additional information about the company that is doing the trade, as they should have that information publicly available. Also read the small print for various conditions that could make it harder for you to get your money back. Some sites have a minimum amount you need to invest, so keep that in mind as well.
Investing in binary options
By investing in these options, you have a chance to earn quite a lot of money. A lot of people use various statistics, trends and predictions in order to get an edge when investing. If you feel like it, you could try that as well.