Binary Options – An Introduction
There are options, and then there are binary options. Traders use binary options on various kinds of financial markets internationally; like many other derivative products, traders make money when they speculate on various assets or commodities and guess right. I do like the qbits megaprofit though. Essentially, with a binary option, you choose a future price, and buy an option based on that guess of a future price. If you’re right, you make money.In other words, you can make a living trading binary options if you can consistently use price fluctuations to your best advantage, insofar as they relate to your underlying traded asset.
Binary options are special in that the amount of money you can make or lose is predetermined. The amount you invest is the maximum you can lose, and the maximum you can make. You might, for colloquial example, refer to them as “double or nothing” options—the way you make money on them is very similar.But this is only the beginning of how binary options work. We recommend you checking Brith Method / Brith Wealth System in order to get familiar with the basics of binary options, since this system offers a detailed explanations which is great if you are beginner.
How They Work
Binary options have another name: “exotic” options. And whereas most options can either win or lose variable, often vast amounts of cash, depending the type of options and the way the market for your underlying asset moves, binary or “exotic” options have a fixed return. For this reason, they are often referred to as a type of FRO—a “Fixed-Return Option.”FROs of all kinds, including binary options, exist and are traded across foreign exchange markets, commodities markets, and stocks (and their related indices). Every type of option, not just FROs and binaries, come with pre-determined expiration dates and a strike price.The strike price refers to the price at which you have agreed to buy or sell your chosen asset at some point in the future—on or before the expiration date, in other words.
Calls and Puts
If you’re trading options, and you have reason to believe that the market conditions are good, and prices are rising, you’ll want to buy a “call” option. Call options make money when you correctly predict that the market will have risen above your chosen strike price by the chosen expiration date and time. You’ll then be essentially buying your underlying asset for less than the current market price, because you had that option. You can then turn around and sell that asset at market price for an instant profit.If you see prices falling in the future, however, go instead for a “put” option. In this case, if you’re right, the market price will have fallen below the strike price of the option, meaning that you can then buy up your chosen asset at the market price, and then sell it instantly at the higher price guaranteed in the option.
More instant profits, provided you guess right.Options in general represent a highly complex way to trade markets of all kinds. There’s much more to be learned about options, so don’t go set up your trading account just yet. There are spreads, long and short positions, and combinations of these for all sorts of market speculations and guesses. The trick is to always educate yourself further when it comes to trading options, as the market is vastly complex and just full of experts trying every conceivable method ensure they make lots of instant profits. Happy trading!