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Binary Options Example

For example if the investor or trader were to speculate that the gold price would increase from its current price at $1712.71, in the next trading session of one hour he would fix the time and the fact that the price would increase above $1712.71.

 

 

 

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Binary Options Example

At the expiry of the hour period he would be deemed to be successful if the price dropped below the price level and earn based on the amount of contracts the investor purchased.

The contracts are generally priced at a 100 and the profit or loss is calculated at the difference between 100 (if the event occurs) or zero (if the event doesn’t occur) and the level at which the investor ‘bought’ or ‘sold.

That means if the investor opts to buy the gold futures contract and set it above 1712.71 at 1:30pm and selects 10 contracts at the offer price. Assuming the offer price is 21.00, each contract is worth $1 per point, the most the investor can make is $790 and the most the most he can lose is $210.