binary option trading?
Wednesday, March 23rd, 2011 at
4:25 am
Question by Stephanie: binary option trading?
Best answer:
Answer by InspectorBudget
And what is your question?
Know better? Leave your own answer in the comments!
Tagged with: Binary • Option • trading
Filed under: Business / Investing
Like this post? Subscribe to my RSS feed and get loads more!
Binary options are all or none for the reward and is based on whether something is true or false. Say you bought a call option for $0.30 debit that says if GOOG price is greater than $700 at expiration, you will be paid $1.00. If not true, you get nothing and your option expire worthless. If you win, you would profit by 1.00 – .30 or $0.70 otherwise you would lose $0.30.
As binary options have become more widely available in the past year, there has been an increase in the amount of binary options trading strategies. These strategies have been developed by both top binary options brokers and individual investors. However, as trader speculation increases, so do the risks. As a result, the need for binary options trading strategies increases. The reason that the understanding of different binary options trading strategies is important is due to binary options traders, and options traders as a whole demand for the increasingly popular binary options.
Purchase a Call or Put option
The most straightforward binary options trading strategy is purchasing either a Call or put option. The advantage of this strategy is that it is very simple. For example, if you invest $500 in a Put option of the EUR/USD, end-of-hour, then for example, with anyoption™, if the pair finishes trading lower by the end of the hour, you get $850. Even if the option you purchased finishes trading out-of-the-money, you still receive 15% return of your initial investment.
I would suggest you read and learn about what exactly Binary Options are and how they work first at http://www.optiontradingpedia.com/binary_options.htm . You simply cannot start to trade an instrument you don’t understand.