Binary Options Explained: What are Binary Options

Binary presents optionsnow BINARY OPTIONS. EXPLAINED. AN INFOGRAPHIC ABOUT BINARY OPTIONS TRADING ON ASSETS SUCH AS FOREX PAIRS, COMMODITIES, INDICES AND STOCKS Binary means consisting of 2 parts because binary options have 2 possible outcomes What is a BINARY OPTION? A binary option is a financial option whose value is pinned to the value of an underlying financial asset such as a foreign currency exchange rate, a commodity price, a stock index average or a stock price where the payout is either a fixed percentage of cash if successful or nothing at all if unsuccessful. Abc BINARY OPTIONS BASICS Who trades binary options? Binary options are traded by institutional traders and money managers via exchanges such as the Chicago Board Options Exchange and over-the-counter by retail investors via online options brokers. When are binary options traded? Binary options are available for investment whenever the underlying assets on whose value they are based are traded. So, if you're trading US stock binary options, you can trade whenever the US sfock exchange is open. When do binary options payout? Binary options generate a payout if or when the option's underlying asset reaches a predetermined value at or before the option's time of expiration. What financial purpose do binary options serve? A binary option is a financial vehicle that gives an indication of current market sentiment for a particular financial asset and/or a financial market as a whole. MOST POPULAR ASSETS Forex Commodities Indices Stocks EUR/USD Gold S&P 500 Google Oil GBP/USDOW NASDAQ Apple BINARY OPTIONS GLOSSARY EXPIRY TIME: The time at which the option's time period ends and at which the option's under- lying asset will have to reach a certain value in order to produce a payout. IN-THE-MONEY: The phrase used to describe an option that has generated a profit. OUT-OF-THE-MONEY: The phrase used to describe an option that has not generated a profit. CALL OPTION: An option where the underlying asset must increase in value in order to generate a profit. $€6 PUT OPTION: An option where the underlying asset must decrease in value in order to generate a profit. PAYOUT: The amount of money that the binary option will generate should it finish suc- cessfully. UNDERLYING ASSET: The financial asset to which a binary option's value is directly linked. The value of the underlying asset will determine if the binary option is successful or not. STOCK MARKET SBIN BINARY OPTIONS Brokerage fees, commissions, etc. No commissions Most brokers only open during business hours 8,000 publicly traded companies Trade 24 hours/day 7 days/week Infinite possible decisions/outcomes +/- 80 financial assets Only 1 decision & 2 possible outcomes Unlimited risk of loss Limited risk: fixed payout, fixed loss Low rate of return ary Payout up to 85% O Slow profit yield Profit in less than an hour optionsnow TYPES OF BINARY OPTIONS 1. Up/Down or Above/Below Trader speculates whether underlying asset will be ABOVE or BELOW the strike price when the option expires. Option expires Strike price 14870 1.3808 1.3862 1.3858 Binary 1.3854 optionsnow 11:48 11:53 12:00 12:07 12:14 12:21 2. Boundary or Zone Trader speculates whether the binary option's underlying asset will be WITHIN or WITHOUT a specific range of values when the option expires. Option expires Specific range 1.38to 13888 1.3862 Imrh 1.3858 Binary 1.3854 optionsnow 11:45 11:52 11:59 12:08 12:14 12:21 3. Touch Trader speculates whether the binary option's underlying asset will reach a predetermined value at any point before the option's expiry. Option expires Predetermined value 1.38 1.3862 1.3858 Binary 1.3854 optionsnow 11:45 11:52 11:59 12:06 12:14 12:21 Corianl PROFIT / LOSS FORMULA Cos COS Investment X % Payout = Profit/Loss Example: You invest $250 in a binary option for oil that pays out 85% because you believe that the value of oil will increase in value by 5 PM later that day. Oil is trading at a value of $100 per barrel when you execute your binary option trade. At 5 PM, the price of oil has gone up to $102 per barrel and your binary option thus finishes in-the-money. Here is the right profit/loss formula: $250 investment X 85% payout = $212.50 Profit HOW TO INVEST IN BINARY OPTIONS IN 5 STEPS. Select an underlying asset. Choose which financial asset you feel comfortable investing in. 2 Speculate on the asset's future value. Determine which direction you predict the underlying asset's value will move in the near future. Choose an expiry time. Decide when you would like the option period to end. 14 Decide how much you want to invest. Determine how much you feel comfortable investing based on the asset's value, the expiry time, and the option's payout rate. 5. Monitor the asset's value to see if your option finishes in-the- Execute your investment. money. Ready to get started? go to ( BinaryOptionsNow.com For trading guides, broker reviews, and free demo accounts! RISK WARNING: Binary options trading involves a high degree of risk as it is possible to lose your entire investment. Only invest with money you can afford to lose and be sure you fully understand the risks involved before investing. Did you find this infographic useful? Please share it using the link below: