Binary options are an innovative way of profiting from the financial markets, without needing a trading or financial background. Deriving its structure from the term binary – zero or one – a binary option is an option which is bought whose outcome is known from the start and whose result is all or nothing (theoretically – though there are some exceptions as demonstrated on (www.anyoption.com).
A binary option trade is like saying: “I predict that at the end of the day my chosen asset will be higher that it currently is. If I’m right, then I’ll get the payout determined by my online trading platform. If I’m wrong, then I will receive nothing, but I will never be asked for more money”.
How does a binary option trade work?
The components of a binary option trade are simple yet with enough variety to enable a personalized trade. The first item to be selected is the asset itself – this could be a currency pair/forex (e.g. USD/EUR), stock (e.g. Apple), commodity (e.g. Gold) or index (e.g. Nasdaq). On the anyoption™ platform there are more than 60 assets on offer covering the American, European, Asian and Middle Eastern markets – something for everyone to choose from. Next, it’s time to select the expiry time. Depending on the platform chosen this could be as near as the end of the next hour, or the end of the day, or week, with the anyoption™ platform offering monthly expiries too. The third step is to decide on the direction in which the asset is predicted to move – UP or DOWN, otherwise known as CALL or PUT. Once the option is bought, the price that the asset is bought at is known as the strike price.
CALL – a call option is bought when it is predicted that by the expiry time the price of the asset will be higher than its strike price. PUT – a put option is bought when it is predicted that by the expiry time the price of the asset will be lower than its strike price.