What Are Binary Options?

Binary options have taken upon entry to the Chicago Board of Options Exchange (CBOE) in July 2008. Before that time, the binary digital options were changed in an active free market for investment funds and large investment banks. What are Binary Options? Binary options, or digital options, options which profit translates as "all or nothing", which gives the investor a fixed gain if the criteria of the option have been met.This means that there is some gain in cash, or even a certain amount of an underlying asset that represents the gain from the option. The Coast CBOE binary options on the S & P 500, but have not expanded their operations to cover the options on currencies, commodities and equity markets. Today, there are many brokers and market makers that provide a secure platform and efficient binary options for investors and sophisticated professional traders.

What is interesting in the binary options is that the investor receives a fixed gain in return, depending on whether the financial market is above or below a given level at any given time. Unlike a standard option, the buyer of the option may seek a specific gain based on a small movement in a financial instrument. When you do the standard options trading, the market must often carry large movements so that there is a gain. Structure designed for binary options creates a significant gain, with relatively minor movements in the underlying market.

In most cases, a binary option is purchased at current market price and the investor will be able to receive a gain on its investment based purely on short-term movements of financial markets. This market is relatively easy to understand, and once an investor is trading in binary instruments, he quickly realized the advantage that it can draw from other options markets. An example of a binary option trade Forex is as follows:

An investor believes that the current price of a currency pair, GBP / USD will be above the current value in an hour.An investor watches the binary options available at a dealer. The investor decides to U.S. $ 200 on a binary option that pays 70% of Forex in return if the market for the GBP / USD is above the current market level within an hour.This option is called Forex bit binary option "call" (above). In this example, a successful trade yield to the investor plus the $ 140 initial deposit of $ 100 for a total of $ 240. If the market is below the current level in one hour, the binary option will yield the investor 10% of the initial deposit (in some cases, the return of your initial investment is less than 10%). In this case, the transaction would yield $ 20 binary option to the investor.

There are also binary options that allow investors to speculate on a specific range over a period of time. These options are called option-or-miss hit. The options hit-or-miss require the trader specifies a time range, and then a range of prices and market maker or broker will then create a prize. For example, a trader can buy an option "hit" in a time slot just after the release of the employment rate in the United States. If the GBP / USD is 20 pips above as part of the price range that the trader has specified in 5 minutes that followed the publication of employment, the investor would receive a gain on the option " hit ".

The prices of binary options are set in a manner similar to the prices of standard options. In general, traders in options must analyze the "strike" (strike price of an option), the price of the underlying financial instrument, and the volatility that arises from this financial instrument to determine whether a value in the "call" or "put" they plan to buy. Binary options in the short term eliminate most problems that relate to the standard options. The sole basis of a transaction is successful if the option is above or below the price after a given time. The advantage of binary options trading compared to standard options is that the investor does not have to consider a number of problems that may arise in the trading of standard options. There is no action to consider a different product, there is no hedging of the Greek alphabet (eg Delta hedging), the investor has two options: to receive a profit or not to receive. The best approximation for a trader to simulate the standard gain of a binary option is to use a "call" very narrow or a spread of put option (put spread). Unfortunately, even this structure would create a problem unless the delay is very short gain.

Binary options brokers and market makers have taken a complex options and made it easy to use and easy to understand, and they allow investors to capture new opportunities to the trading of capital market.