Binary options trading

Binary options

Binary Options (or digital options) have been listed on the Chicago Board of Options Exchange (CBOE) since July 2008. Before that date, binary options were actively traded by institutional investors and major investment banks on the OTC (over the counter market). Today, brokers and market makers feature platforms which allow individual investors and professional traders to trade binary options.

The thing that makes binary options attractive is their ease of use. The trader must just choose whether the market value of the underlying asset will be above or below the exercise price at the end of a period of time defined in advance (end of day, week, one hour or even 15 minutes). With binary options, atrader can receive a return on his investment in the short term based on small movements within the financial markets (stocks, commodities, currencies and indices). With binary options, risk is limited because the profit or loss will be defined in advance and it cannot change.

The different types of binary options

For each type of option, the exercise price of the underlying asset is determined when placing the order; this is the strike price. Next, the trader chooses how much he wants to invest and one of the two possibilities offered by the option he has chosen.

If the investor was right when the contract expires, he earns a profit defined in advance as a percentage of the amount he invested. If he is wrong, he loses some or all of this investment.

Cash or nothing - High Low

High: to bet on a price rise with a "buy" option, the market price will therefore need to be above the strike price when the option expires.

Low: to bet on a price decline with a "sell" option, the market price will therefore need to be below the strike price when the option expires.

Choose the market direction, enter an amount and buy:

High - Low option

Touch

Touch: the trader predicts that the price will reach the target price at least once before the option expires.

No Touch: the trader predicts that the price will not reach the target price before the option expires.

Decide whether price will touch the target price, enter an amount and buy:

Touch option

Boundary - Range - Limit - Zone

In: the trader predicts that the market price will be within the upper and lower limits of the target area when the option expires.

Out: the trader predicts that the market price will be outside of the upper and lower limits of the target area when the option expires.

Decide whether price will remain within the boundaries or not, enter an amount and buy:

In - Out option

Binary options brokers:

Although there are many binary option brokers out there, ETX is probably the best one you can find.

Established in 2002, ETX Capital provides an online trading platform which allows traders to buy and sell indexes, commodities, currencies and stocks. With ETX Capital, you can benefit from a return as high as 85% within a few minutes, and the risks and profits are defined before the investment.

Minimum deposit: $10 USD / EUR / GBP.

The minimum amount required to invest in an option is generally $10 USD/EUR/GBP.

-> Visit the ETX Capital website.

-> Read an ETX Capital review.

 Main officeRegulationPlatform Binary options Vanilla options
United KingdomMiFID / FCAETX Binary YesNo
 PayoutsReturn on lossExpiration timeMin. trade sizeDemo accounts
60 to 85% 0%60 seconds to 1 month$10/10€/10£Yes
 Min. depositDeposits / WithdrawlsBonus1st trade reimbursedMobile trading
$10/€10/10£Credit card, bank transfer, checksYesNoYes
 RolloverHigh/LowTouchNo touchZone
 Yes   
 
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