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Binary options are also known as all or nothing options because there are only two possible outcomes of the trade – you either win a predetermined payout or lose your initial investments. There are sometimes exceptions to this rule because some binary options brokers offer their clients the chance to return a small percentage of their money in case the deal is not successful. This is the so called return loss percentage and it is usually between 0% – 15% depending on the asset and the broker’s policy. Another rare exception appears in cases when the asset price at expiry is equal to the strike price. The term used in this situation is at-the-money and the whole initial investment is returned to the account of the trader.
There are three basic components of the binary option and these are the underlying asset, the expiry time and the price direction. Let’s give you an example to explain their meaning and to illustrate how they relate to each other when we trade binary options.
Once we have selected the asset and the expiry time we need to make a prediction about the direction of the asset price. If we believe that the market price will go above the strike price at expiry we have to choose “Up” (which equals to Call option). If we expect the price to fall we have to select “Down” (Put option). The last thing to do is to enter the amount we wish to invest and to verify the deal with a click of the button.
The profits from binary options trading are different and depend on both the broker and the binary option type that is traded. For instance most of the binary options brokers offer a payout of 65%-85% for the Call/Put binary options and from 350% to 500% for the One Touch binary options. As you can imagine this high payouts are connected with a great risk so always trade with caution and follow the rule that says not to invest more than you can afford to lose.
In other languages:
leer un reloj binarioLeggere un Orologio BinarioLer um Relógio Binárioчитать время по бинарным часамEine binäre Uhr ablesenlire une horloge à affichage binaire
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