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What are binary options?

Binary Options, often referred to as digital or fixed return options, are a simplified method of trading the financial markets. They retain the characteristic of a Contract for Difference with a determination of whether the price of a financial asset will be below or above the current price.

 

 

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What are binary options?

Binary Options reference financial assets such as shares, currencies or commodities and relates to whether the price will close ABOVE or BELOW the current market price within a set time period.

If the price prediction is correct, the trader wins the trade and earns the payout established for that particular asset and time period calculated as a payout figure.  If the prediction is incorrect, the option ends at a zero valuation and the trader loses the amount they placed.

During the trading period, binary options are always priced somewhere between zero points and 100 points. If an outcome is highly likely to occur, you might need to pay 90 points or more for the option. If an outcome is very unlikely to occur, the option might only cost 10 points or less.

As with all options, the valuation of a binary option will change as it approaches its expiry.

Binary Options were designed as investors strove for an innovative and simple way to trade options across the financial markets. This became reality with the technological advances over the last five years that allow the general investor greater access to the financial markets.

Binary Options are a cross between traditional buy-and-sell options and those of fixed returns. The simplicity of the Binary Options is that there can only be one of two outcomes either the price is above or below the current price.

See an example of one such binary option.

If you would like further information or assistance, please contact Sophie Grace directly.