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[Off-Topic] Trading Binary Options

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Posted on 3/22/20 3:54:26 PM | Show thread starter's posts only

Binary or digital options differ from traditional trades in many ways. Once termed exotic options and available to only a select rich investors, now anyone can trade in binaries through website platforms. Binaries offer predetermined wins and loss and the results are set payouts. An investor estimates that an asset will rise or fall over a period of time. "Call" options are made if the prediction is for an asset to rise and a "put" option indicates that a trading asset will fall. If the investor's estimate is successful, a set payout amount is received. On the other side, if an investor's prediction fails the amount invested is lost. Keep your options open and only trade if you can afford to lose your investment.

Binary Movements

Since 2010 the popularity of trading binary options has doubled due to the simplicity of trading as well as the possibility of very quick gains. A typical binary trade could be illustrated in the following manner.

An investor checks the wheat commodities market early in the morning. It is predicted that wheat will drop significantly in price close to the end of the day. The markets are somewhat stable and this makes prices highly predictable. As a potential investor, log into your trading account and you read that "in the money" accounts on wheat are up to 75% in payouts, but the losses are as high as 90%. With these figures in mind, the investor invests $1,000 on a "put" option (or prediction that the price of wheat will continue to fall) and sets the expiry time at 3:00 pm. As you watch the wheat market, the price actually falls from $5.00 to $4.99 and by the 3:00 expiry time wheat is essentially at $4.90. The investment has ended "in the money" and a 75% payback is received. The original $1,000 is now $1,750. Within a very few hours, a substantial sum was made on a relatively small investment.

Posted on 3/24/20 10:43:10 AM | Show thread starter's posts only

can afford to lose your investment.