Category: Binary Options
Binary Options Trading
We are all familiar with the basics of trading – a trader studies the market and buys an asset at certain price, hoping that its price will rise and he will sell the asset at the new higher price and profit from the difference.
In binary options trading though this is different. Yes, the trader, otherwise known as the buyer, will look into the market and yes he will decipher which way he thinks the market will move, but the outcome and method of profiting is somewhat different.
The basics of binary options 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.
Binary Options Brokers
