Binary Options Trading

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Investments can be a good way of earning money. But when making any kind of investment you need to be well aware of the market as well as the investment options available. If you are a beginner in the world of investment then you might want to go for binary option instead of traditional options. Binary trading is simpler and much more convenient for those who are getting a hang of investment. Binary trading offers you a fixed risk or a fixed reward, so you will be well to be aware of what you have gained or lost. There are many factors that need to be kept in mind when it comes to binary trade.

Expiration

This investment option has a lot to do with the expiration of the option. Generally every contract has a fixed expiration date or time. When you are buying or selling a binary option you can see the expiration date or time very clearly. This is very important since the contract has to expire in money for you to get the fixed sum. If the contract expires out of money then you might get a very meager sum or no compensation at all. Hence the expiration is very important when it comes to binary trade.

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Strike Price

When you take part in binary trade the strike price is important since it determines whether you gain or lose money from the investment. The strike price is essentially the price at which you buy the contract. In the course of time the contract might lose money or gain money. By the end of the expiration time or date, the sum should be more than the strike price if you bet on the price to go up (call). If the sum is less than the strike price and you bet that the prices will be lower than the strike price than you made a profit. But if you bet the price of an asset to go up and by the end of the expiration time the strike price was higher  then you might lose the money that you have invested. If it is above the strike price you might get the fixed compensation.

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Payout

The broker that you are doing the binary trade with will give you payout offers. The payout offers are essentially percentages of the sum that you have invested in the first place. If your contract wins and gains money then you can get the payout percentage. If your contract loses then you will not get any amount. The payout offer essentially gives back a percentage of the strike price that you had invested.

You need to be aware of these three conditions while taking part in binary trade. No matter how lucrative the trade is, be sure to invest wisely.

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The Perks of Binary Trading

There are a few factors that make it so easy and simple to trade binary options:When trading binary option you don’t need to pay any additional fees as you would normally do in traditional option, such as portfolio management fees, fees for giving a buy or sell order.

If you want to invest in a stocks or commodities you buy them because you came to a conclusion that the price of an asset you want to invest in will rise. Than what you need to do is to buy the asset itself whether it’s a stock, option, currency or commodities.  This means that you need to have enough in the first place to buy the asset and make an investment. With binary option I don’t have to pay for the asset and I don’t need to buy it I just buy the option upon the asset. If I buy a CALL option it means I think that the price of the asset will rise and if I buy the PUT option it means I think the price of the asset will drop.

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Trading Index Options – What Is It

When you want to get started trading index options making sure you understand the basics of trading index options is where you should start.  Even if you have been trading options before but are new to trading index options taking the time to learn a little bit about index options should be the first step in learning to trade index options.

There are many different types of options and sometimes it can get a little blurry as to which options cover which assets.  This is why you should be sure what you are getting into with trading index options.  Index options that you may know about or already be familiar with are S&P 500 index options, Nasdaq-100 index, and S&P 100 index options.  Those are only a few of the popular ones but if you have been trading before you likely recognize them.

The first thing you should know before you get started trading index options is that there is a difference in trading style based on the size and type of indexes being traded.  For example larger indexes are traded under the European style of options trading and smaller individual stocks and exchange-traded funds use the American style of trading index options.  There are several difference between these styles like how the options are settled where it is cash versus the exchange of shares, when they can be exchanged and whether it takes place before or after the expiration of the indexes, and how the final price is settled.

The main idea behind indexes was to eliminate the risks which are associated to trading a single share or asset. For example if you were to invest in a single stock, any change in the company management or its surrounding would affect the asset drastically, that is why index were created. The index is assembled by small of fractions of many companies to create a more secure asset.

Now that you know a little bit as to the different styles of trading index options it is no surprise that index options are a great way to really beef up your trading portfolio.  When you trade the same style of stocks and options it can really limit your portfolio, by trading index options you can really diversify your portfolio.  As an investor you will be exposed to a larger number of indexes and securities through this type of trading than others.  This is in part due to the larger and more popular index options like those previously mentioned.

If you are looking to get into a new type of trading than trading index options could be just what you are looking for.  There are many great aspects to this type of trading but you should look into the differences of this type of trading compared to what you usually do.  Investors will have the potential to really diversify their portfolios as well as profit from trading index options.

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2 Comments
  1. Reply
    filbert September 17, 2017 at 4:24 pm

    Very interesting notion that the action for the investment comes around the time it expires. That is a little different from a traditional stock, right?

  2. Reply
    vitalij September 22, 2017 at 1:13 pm

    What would you say is considered a “good” payout for something like this? I mean, if I am going to find a broker, this might be one of the things that help to make the decision a little easier.

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