Understanding Binary Options

Actually, the concept of binary options trading is easy. Your broker offers you a number of assets, and you pick the certain asset you wish to purchase. After that you buy a contract, which can last as little as minutes up to an entire day. You will then predict whether the movement of the market will make your assets increase in value or not. Should your prediction prove right, you will receive the amount your contract indicates. On the flip side now, if your move is the wrong one, you will lose anywhere from 85 to 100 percent of your investment.

As the binary name implies, you can only select from two predictions. You are either “in the money” or “out of the money.” You are in the money when your asset is at a higher value when your contract expires. On the other hand, you are out of luck if the value has fallen at expiration.

In binary options trading, there are basically two types. There is a cash-or-nothing option, which gives you a fixed price should your asset reach the strike price, sometimes as high as 185 percent. Now with the asset-or-nothing method, you are paid the total value of your asset if your prediction is correct.

As mentioned above, binary options trading is not without risk.

That is why it is widely called the “all or nothing option.” Obviously, the main risk is that you lose your entire investment if you’re wrong. There are some contracts that will allow you to receive a very small percentage of your investment back, but still. Your best bet is to make sure you are educated in predicting short term fluctuation in the market before engaging in binary options trading.

That said, there is another way to try binary options trading. That is by reselling your assets to another trader. There are some traders who will indeed pay a higher price for your assets before your contract terminates. Doing so at least guarantees some return on your investment. It also eliminates the chance of losing your investment if the contract ends out of the money.
By now, you must be asking where you can find good options brokers.

A quick internet search will give you a slew of brokers offering binary options trading. Do your due diligence though. Go through reviews and likewise ask family and friends if they know of any good online brokers.

Go through their policies with a fine-tooth comb before signing on the dotted line. Pay extremely close attention to their terms and conditions. Know what the exact fees are on payouts. Be aware too that some brokers will not pay you in cash. Instead, they will offer you a discount when you buy your next asset. Be certain that every detail is clarified with the broker you choose.

Look into the solutions each of them offer as well. Lots of brokerages also offer an array of trading tools right on their websites. This could serve quite handy if you choose to engage in more trades. Lastly, make sure that the movement chart of your asset price that is on your broker’s site is equal to that of real-time stock charts. For the most part, reputable brokers will give accurate info, but hey, it’s your money on the line so double-check.

Binary Forex options trading: how to trade on currency pairs

Many traders think of the stock market when they hear about binary options. However, the Forex also offers retail traders great opportunities to make some high returns. Binary Forex options trading allows you to limit risk and see profit in little as one hour. Here we’ll discuss what Forex binary options are, how they are used and which strategies you can use to profit.

Let’s begin with a short explanation about the Forex before we get into binary Forex options trading. A global, decentralized over-the-counter financial market for the trading of currencies, the Forex, or Foreign Exchange Market, allows banks and other institutions to easily buy and sell foreign currencies. Financial centers around the world act as hubs for trading between a large variety of buyers and sellers day and night, except for weekends. For example, it enables an American company to import products from South Africa and pay in Rand even though its income is in dollars.

The exchange rates of currencies on the Forex fluctuate (floating currencies) according to the market. A currency’s value rises if the market demand for it surpasses the available supply and drops in the opposite scenario. This is where binary Forex options trading comes in – a new type of investment that allows the average person to be active on the Forex. Binary Forex options trading via an online platform offers you a tool to purchase Call and Put positions on chief currency pairs like the US Dollar against the Japanese Yen and the US Dollar against the Euro, among many others.

Online Binary Forex options trading enables the middle or amateur investor the chance to trade on the Forex with smaller amounts of capital but with the same high yield returns as any other method. Plus, returns can be collected in just one hour. What you are doing with this form of trading is attempting to predict whether or not one currency in a pair will trend up or down against the other.

Let’s look at the Forex options trading available at online binary options trading platform anyoption.com – a leader and pioneer in the field. They offer trading on the following pairs:

• Australian Dollar (AUD)/US Dollar (USD)

• Euro (EUR)/British Pound (GBP)

• Euro (EUR)/Japanese Yen (JPY)

• British Pound (GBP)/ Japanese Yen (JPY)

• New Zealand Dollar (NZD)/US Dollar (USD)

• Euro (EUR)/US Dollar (USD)
• US Dollar (USD)/British Pound (GBP)
• US Dollar (USD)/Japanese Yen (JPY)
• US Dollar (USD)/ South African (RAND)
• US Dollar (USD)/Canadian Dollar (CAD)
• US Dollar (USD)/ Swiss Franc (CHF)

Each Forex options trading currency pair has an expiry level calculation. Let’s look at AUD/USD as an example. This currency pair, like most, has hourly, end of day, end of week and end of month expiry times. The expiry formula is the sum of the ASK value and the BID value, divided by two [(ASK+BID)/2]. The result is rounded up if the fifth decimal digit is 5 or higher and rounded down if the last decimal digit is 4 or lower.

Let’s say you have $2,000 in your binary options trading account and you decide to take up Forex options trading on the AUD/USD. Let’s use the recent rate of 0.91721 for this example and a 70% return rate. Earlier this week, you read that the AUD/USD fell from 0.9206 to 0.9145 and settled under 0.9170 after the Australian government released some disappointing growth figures. So you predict that the AUD will continue to drop against the US dollar. You purchase a Put option for $500 with a one hour expiration. If your prediction is right and the price falls at the end of the hour, even if only by 0.001 below the strike price, you will collect $850 ($350 in returns plus your initial investment). So in the end, a $500 trade could easily earn you $350 in profits and you could repeat the same binary options trade a few times in one day.

Binary options tips & strategy for success

Although binary options trading is simpler than the majority of investment tools, there still is an element of strategy involved. After all, you are making an educated guess on the movement of stocks, commodities, currencies and indices that are influenced by many political and economic factors. Below are some binary options tips & strategy suggestions for traders who are looking to approach this financial niche from a logical perspective.

Trade slow and steady

When you first start to trade binary options it is really important to start slow and build your earnings gradually. Begin by executing smaller trades and try to maintain a steady flow of earnings in order to keep your costs down. As you become more experienced, you can increase the size of your trades. When it comes to binary options tips & strategy, this is a great one for those of you who need to build up their confidence and keep the stress levels down.

Become an expert at asset price and volume movement

Sometimes, the straightforwardness of binary options can be deceiving. Despite the fact that all you have to do is predict the general movement of an underlying asset in order to receive substantial returns, you still need to be knowledgeable to succeed. The best way to improve your chances at earning big is to become familiar with movement of price and volume of the specific assets you like to invest in. Our binary options tips and strategy here is to study the movement of a particular asset over a few weeks time and read up on the major factors that influence the asset’s movement. Once you feel as if you have covered all angles and that you can make the best educated guess possible – go for it.

Get your timing right

Timing is crucial with binary options since the price of an underlying asset at expiration is what determines the payout. Since a binary options trader is only hoping for a small move above or below the strike price, the best way to trade this type of option is to minimize the amount of time that is left prior to expiration. This is why most binary options traders choose the one-hour expiration. Binary options tips & strategy for timing: try to interpret prices before you trade and monitor closely price movement with volume and price charts over daily, weekly, monthly and yearly intervals and pay attention to trends.

Pairing: binary options tips & strategy for reducing risk

A strategic way to reduce the chances of losing too much with binary options is pairing up a Call trade with a Put trade on an underlying asset. This creates a “nest” for you and you can make money if the spot price at expiration falls between the two stock prices. Let’s look at an example. Presently Vodafone is trading at 146.729 per share. You decided to purchase a Call option at the top of the morning when the spot price was 140.565 per share for £200 with a 70% return rate in-the-money and 15% return rate out-of-the-money.

So basically you are in a good position. Your £200 call option is in-the-money and if nothing changes your return will be £340 (£200 investment plus £140 profit). But what would happen if Vodafone’s stock suddenly takes a turn for the worse and their share price falls under 140.565? You will receive a 15% return of your invest and incur a £170 loss. That would be pretty disappointing.

So the question is, how can you secure a more favourable outcome here? Binary options tips & strategy for risk reduction: “hedge” your initial Call option with a Put option at the current price. This means you would purchase a £200 Put option on the 146.729 spot price with a 70% return rate in-the-money and 15% out-of-the-money. Now you have a wonderful hedge position for your original Call investment.

You can look at binary options as a basic tool if you want, but should you decide to dig deeper, these binary options tips & strategy ideas should come in handy. And remember simplicity never yields high returns!

As the week draws to an end and the markets close, binary options trading gets put on hold until Monday morning. For those of you who have more time on the weekends to spend on binary options trading and prefer to catch up on the news of the past week on Saturday and Sunday, you might want to check out one touch options and how they can diversify your investment portfolio.

What are one touch options?

One touch options offer an investor a payout once the price of an underlying asset “touches,” exceeds or falls below a predetermined barrier. This type of binary options trading gives the investor the power to set the barrier, the time of expiration and the payout to be received if the barrier is surpassed. Like regular binary options trading, there are only two outcomes with one touch options: the barrier is met or surpassed and the investor collects the full return or the barrier is not reached and the trader loses his investment.

Let’s look at a one touch example within binary options trading. It’s Saturday and you log in to your online binary options trading provider. You see that the Dow Jones closed the week at 10.566. Your binary options trading provider offers you a one touch option: invest $100 or more in the movement of the index and if its daily sampling price touches or exceeds 10.791 by 6:00 PM the following Friday, you collect a 350% return.

Now you are at home; it’s quiet and you have some time to think about how you want to invest your money in binary options trading sites. According to the financial round up articles you read about the week that has gone by, you don’t foresee the Dow Jones moving toward 10.791 in the coming week. In fact, your hunch is that it will drop, if anything. So instead you choose another one touch option from the list on your binary options trading platform. You decide to invest $100 in the notion that the Dow Jones will fall to 10.372 or lower by following Friday. If your prediction becomes a reality any time between now and the date of expiry, you get a 150% return on the $100. That’s an easy $150.

The benefits of one touch binary options trading

The most obvious benefit is that one touch options usually have higher returns than regular binary options (60-71%) One touch options are useful for investors who think that the price of an underlying asset will surpass a certain level in the future but may not sustain it. Becoming more popular in commodity and index binary options trading, one touch options do not have to be cashed in at their time of expiry. They can be cashed in at any point during their life, which make them a good hedging tool for stock option strategies or forex spot positions.

How do I take advantage of this type of binary options trading?

One touch options are available from online binary options trading platforms like anyoption.com. Every weekend after the markets close, anyoption.com offers investors to purchase short-term one touch options for the week following. These options have a guaranteed return between 200 – 380%. One unit is priced at $100 so that beginner traders who do not want to invest high can also trader one touch options. You can invest in up to 40 units per option. Anyoption.com offers a special weekend 380% return on underlying assets like the FTSE 100 and 350% returns on the EUR/US currency pair. They have a very user friendly one touch binary options trading interface where all you have to do is choose the amount of units you want to invest in and click on “buy.” Payouts are transferred directly to the investor’s binary options trading account.

Now you don’t have to go the weekend without a trade. Try one touch and where it takes your investments…

There are currently four types of underlying assets available in binary option trading. They are stocks, indices, commodities and currency pairs.

Stocks:
A stock is the value of a company, represented in shares. The higher the share price, the more a company is worth. When investors purchase a binary option on a stock, rather than buying the shares themselves, they are investing in the direction in which the shares will move. This enables investors to benefit from expensive stocks whose high price might otherwise have excluded them from the market.

Indices:
An index is made up of several stocks together. For example, the Dow Jones is made up of 30 stocks which are traded on the New York Stock Exchange and the Nasdaq. This means that rather than buying several individual stocks, an investor can reach more stocks in one purchase, gaining exposure to a wider section of the market.

Commodities:
A commodity is a good which can be traded. The binary option platforms on the (website name) site, currently offer options on oil, natural gas, gold, silver and copper.

Currency pairs:
A currency pair or forex (foreign exchange) option involves estimating how two different currencies fluctuate relative to one another. They are quoted in pairs such as USD/EUR which represents how many Euros are needed to buy 1 USD. The stronger the USD is, the higher the rate of the currency pair will be. On the binary option trading platforms there are 9 different currencies, creating many combinations of forex options.

source: The underlying assets in binary option trading

A binary option is a contract which gives the buyer of the contract the right to buy an underlying asset at a set price at a set time in the future. The underlying asset could be a commodity, index, currency pair or stock. The set price at which the contract is bought is known as the strike price and the set time is called the expiry time. It is the price of the underlying asset at the expiry time which determines the outcome of the option.

So, at the time of buying the contract the investor must make a decision – if he thinks that at his chosen expiry time, the asset’s price will be above the strike price then he purchases a Call option. If he thinks the contrary, that the asset’s price will be below the strike price at the expiry time then he purchases a Put option.

If he buys a Call (Put) option and indeed the price of the asset is above (below) the strike price then he is said to be in-the-money. If however he buys a Call (Put) option but the price of the asset at the expiry time is below (above) the strike price then he is said to be out-of-the-money.

In-the-money options can lead to returns of 60-71%, depending on the platform being used and some even offer a return of as much as 15% if an option expires out-of-the-money.

A possible binary option trade could be:
Underlying asset: Gold
Strike price: 1006.70
Expiry time: end of the day
Option type: Call
Investment: $500
Return: 70%

What the investor is in-effect saying, is that he thinks that at the end of the day, the price of Gold will be 1006.80 or above. If he is correct, then his option will expire in-the-money and he will receive $850 (70% of $500). Is he is wrong, then his option will expire out-of-the-money and he may receive $75, depending on the platform.

source: The basics of binary options trading

Each investor has his owns methods and systems of trading binary options. The strategies listed here are not fool proof nor is the list exhaustive, but they are industry accepted methods which are deemed beneficial by many investors.

The Reversal
This is based on the concept that if an asset suddenly moves in one direction, it is unlikely to remain at that peak but will move back towards its original position, if not all the way. So, an investor should buy an option, Call or Put depending on whether the price has risen suddenly or fallen suddenly, on the assumption that it will soon return and stabilize. Of course, no-one knows when an asset has reached its peak. So close monitoring of the asset and researching why it peaked is vital to deduce the likelihood and timing of its return.

The Straddle
This strategy is more complicated as it involves buying both a Call and Put option on the same asset. The premise is to straddle the asset at a low point and at a high point, so that the area in between the two options can be a double success for the investor. This is often used when the volatility of the asset is high and so an investor wishes to protect himself. An expiry level in between the two strike prices would be ideal, however if it falls outside of this parameter, then at least one option would expire in the money. The Call and Put options do not have to be bought at the same time. Rather an initial option can be bought with a longer expiry and the second purchased once the asset’s direction is more established.

Note that the straddle in binary option trading is different from with vanilla options since the purchase price and exercise rights differ between the two.

The Knock on Effect
This is the most logical of the strategies. The idea is that a move in one asset will have a knock on effect to another asset. For example, the price of a stock may affect the price of the index in which it trades. Or if a country heavily relies on a particular asset, then a change in that commodity’s price may affect the country’s exchange rate. The key here is to understand the connections between assets and be prepared for movements in either one.

source: Binary Options Trading Strategies

An underlying security is the item which is being traded. This could be stocks, commodities, currencies and indices. The fixed price at which they buy or sell at, is known as the strike price.

There are two types of binary option strategies: Call and Put.

In a call option, the owner may buy a quantity of an underlying stock at the strike price within a set time frame.

The buyer of a call option believes the market price of the stock will rise above the strike price. If this materializes, then the option (or contract) allows the owner to buy the stock at the original price which is lower than its current price. This means he can profit from buying the stock below its market value and profit from the difference.

In a put option, the owner may sell a quantity of an underlying stock at the strike price within a set time frame.

The buyer of a put option believes the market price of the stock will fall below the strike price. If this is the case, then the option allows the owner to sell the stock at the original price which is higher than its current price. This means he can profit from selling the stock above its market value and profit from the difference.

In the options market, there are both American and European options. American style options can be exercised at any time up to, and including, the expiration date and time. Whereas European options can only be exercised at the expiration date and time itself.

source: What is an option?

• Open Account
  Take a few minutes in order to fill in your personal details accurately. Remember to treat your username and password in a safe manner
• Make a deposit
  Have funds instantly available in your account using your card or one of the other available deposit methods. All easy and secure
• Start Trading
  Our most popular and active assets are presented. Choose other assets and expiry points using the trading boxes drop down menus
• Choose CALL or PUT
  Click “Call” if you predict that the expiry of the asset will be higher than the level currently quoted. Click “Put” if you think it will be lower
• Enter investment amount
  Type in the amount you would like to invest in this option, making sure that the investment details are correct, and then click “buy”
• Wait for expiry
  The expiry level will be displayed in the trading box at the time of expiry. You can find all historical data under “past expires”

Anyoption Payment Services Ltd.
Binary Options – anyoption™
Phone Number: +44-20-80997262
- support@anyoption.com
- www.anyoption.com

source: Binary Options Trading Quick Guide

What is an Underlying Asset?
A commodity, index, stock, currency pair or any other financial asset that constitutes the basis for creating an option.

What is a Call Option?
An option that provides the holder with a profit when the underlying asset increases in price compared with the level it was purchased at. In the event that the option expires exactly at the same price, the full original investment amount will be returned to the investor.

What is a Put Option?
An option that provides the holder with a profit when the underlying asset depreciates relative to the purchase level. In the event that the option expires at exactly the same price, the full original investment amount will be returned to the investor.

What is the investment amount?
The amount of money invested in an option.

How to invest?
To invest, you must choose between “call” or “put” options for a given underlying asset. Clicking on the call/put button will open an investment sheet in the same box, where you will be requested to enter the amount of the investment and to approve execution. The selection may be canceled by clicking on “X” at any time before approval of the transaction. Please note that the level keeps updating in the investment sheet.

What return will I get for a successful investment?
A successful investment will result in a guaranteed return indicated on the site for the underlying asset that you selected. In the event that the option expires out-of-the-money, you will get a 15% refund of your investment amount.

What return will I get in the event that the option expires out-of-the-money?
In the event that the option expires out-of-the-money, your account will be credited automatically with 15% of the original investment amount. For example, if you invested $1,000 in a Nasdaq Call option, and at the time of expiry the level was lower than that at which you made the investment – you will automatically receive a refund of $150.

What is the difference between All Or Nothing Options and anyoption™ product?
In some commercial banks, traders can price for individuals a personalised binary option, where the individual can either get certain agreed return or lose all of his/her investment. In anyoption™ the return in case of in-the-money expiry is agreed in advance (65-71%) and on top of it there is a guaranteed 15% refund in case the option expired out-of-the-money.

What is the maximum investment amount?
The maximum investment amount for a single option is 3,000 USD (or the equivalent in one of the other available currencies). However, multiple options may be purchased, one following the other, at a higher and basically unlimited accumulated amount. If you wish to purchase options for greater amounts, you will have to purchase an option at the maximum amount of 3,000 USD, and then purchase an additional option, and so on.

What are the levels displayed in the trading boxes?
Level – the quoted price for an option of an underlying asset. The level changes and is updated frequently according to different parameters that anyoption™ proprietary algorithms take into account. The levels we present in the trading boxes in our home page are those at which anyoption™ is willing to sell options, and are not the real time market levels.For more details about how expiry levels are determined click here.

What is the expiry level?
The expiry level is the level of the underlying asset at the time of expiry of the asset according to Reuters. This is the determining level if the option has expired in-the-money or out-of-the-money. A different expiry level is determined for each underlying asset. The calculation of the expiry levels is detailed here.

What is the expiry time?
The expiry time is the time and date at which an option expires.

What is the expiry time?
The expiry time is the time and date at which an option expires.

What is the difference between purchasing options in anyoption™ and buying put and/or call options in the stock market?
The options available in anyoption™ are binary options (see definition above). They are different to standard (vanilla) option chains that are offered by stock exchanges. The latter typically have longer expiry dates, significantly fluctuating yields, and can be sold before expiry. Binary options have a fixed return and are offered for different expiry points from the end of an hour to the end of a month.

What is the meaning of the colors for the levels on the trading floor?
The colors indicate the direction of trading relative to the previous trading day. Green indicates a higher level than the anyoption™ expiry level for the previous day’s trading. Red indicates a lower level than the anyoption™ expiry level for the previous day’s trading.

What happens if the expiry level of a given underlying asset is identical to the level at which the transaction was made?
In the event of expiry at an identical level to the transaction level, the amount of the investment is returned to the customer. For example, if the customer has made a 1,000 USD call investment on Nasdaq at a level of 1,620.23, with an expiry time of 11:00, and the level at the expiry time was 1,620.23, the full investment amount is returned to the customer, and the customer’s account will be credited by 1,000 USD.

What is the time zone of the expiry time?
The site’s trading hours and expiries time are shown according to your PC’s time zone.

Are the profits taxable?
anyoption™ customers are responsible for their taxation liabilities, if any, at their place of residence. See our general terms for more details.

Why can’t I invest?
All our assets are available during market trading hours. Outside market trading hours, the asset will be displayed in anyoption™ but will be marked as disabled. On rare occasions, investments are not available for certain assets owing to technical reasons. Usually these problems are quickly resolved, and you may try again shortly. Other than this, you will not be able to invest if you have insufficient funds in your account.

Where can I view the precise trading hours of each asset?
A detailed list of all our available assets, their description, expiry times, symbol and trading hours is presented in the Asset Index.

Buy CALL option and Get 65-71% Return if the option expires above level.
Buy PUT option and Get 65-71% Return if the option expires below level.
Anyoption Payment Services Ltd.
Online Options Trading – anyoption™
Phone Number: +44-20-80997262
- support@anyoption.com
- www.anyoption.com

source: Binary Options Basics