Trading on Binary Options
Friday, November 11, 2011
One of the riskiest trading options around yet is binary options trading. The payout for this kind of option is either a fixed price or asset, or none at all. It's very risky especially for a newbie to try this type of trading. In some cases, investors give back a small percentage of the investment, at times around 5 to 10 percent of the strike price. However, the most basic cases and situations do not call for a refund or return of investment.
To trade in binary options, you must first create an account on binary options brokers online. Major online brokers are currently dealing with this kind of option. After choosing and setting an account, you start choosing an underlying asset to trade. In this event, you can either study different markets for their viability and profitability, or pick one where you're most comfortable trading with if you're an experienced trader. Trading knowledge is very important in binary options so as not to give an unprofitable decision. Study all markets you might possibly handle, and draw their asset values on current trading figures. It would shed a good light if a commodity has a high asset. Make a call option for those with high assets so you can profit when it expires in-the-money. On the other hand, you may still opt for those with lower assets if you feel more attached and hopeful to it, but it'll be wise to purchase a put option for it to also profit from it.
What's left from this stage is to wait for the result of your investment as it reaches the maturity date. At times when a contract expire in-the-money it gets up to 75% profit from it, better than losing and getting no return at all. Binary trading options come in several types, depending on which maturity date will your investment on a contract end.
The most basic binary options are cash-or-nothing and asset-or-nothing. Both of these options have the same processes of profitability, but they differ in one aspect. The latter option opts for a strike price while the former would rely on the price of the asset upon the end of the contract. Both of these options would payout if the asset price or strike price gets higher towards a maturity date. When they don't get higher, the contract is lost. There are also other types like the one-touch and no-touch binary options that would necessitate first a level of determination. The latter, when that determined level is reached, would hand out pay. The case is inversely different for the former.
