What are binary options?
A binary option is a financial investment, based on a limited time contract. This trading contract is established on financial assets in real time using live market data(indexes, stocks, forex, commodities) The contract duration may vary between 30 seconds to several months. Binary options investments have high profitability rates. Take for example, a contract established on the value of GOOGLE for a 1 hour duration, if you were to invest a $1000 call(buy) with a 87% payout, in an hours time, when the contracts expires, you make a $870 profit if the value of GOOGLE goes up. On decreasing, you would loose your investment.
What is a binary option broker?
A binary option broker is a private financial company, A broker allows a customer to invest on the financial markets through their trading platform
Do I need to download software to trade binary options?
There is no need to download any software to trade binary options. Most, if not all brokers use Mobile and Web based Platforms which can be accessed directly from your web browser, making the set-up for investing quick and convenient.
Common binary option terms
- Binary Call Options
-Binary call options gain value when the underlying asset is trading at more than the strike price at expiration.
- Binary Put Options
-Binary put options gain value when the underlying security is trading at less than the strike price at expiration.
-The amount of money earned from a trade.
- Strike Price
-The strike price is determined by the price of the underlying asset at the moment at which the option is purchased.
-The time and date at which the value of the underlying asset is judged against the strike price to determine payoff.
- In the Money
-An option is said to be “in the money” if the option gains value upon expiration. A put option is “in the money” if the price of the underlying security is below the strike price. A call option is “in the money” if the price of the underlying asset is above the strike price.
- Out of the money
-An option is said to be “out of the money” if the option loses value upon expiration. A put option is “out of the money” if the price of the underlying security is above the strike price. A call option is “out of the money” if the price of the underlying asset is below the strike price.
- At the money
-An option is at-the-money if the strike price of the option equals the market price of the underlying asset. This can also be considered the “break even point” since the option neither gains in or loses value and the payout equals the original amount traded.
Feel free to ask any questions, here to help!! newbies don’t be shy, we all start somewhere….