#Binary Options have been around for a while now but recently (since 2008) have been a hit among the new traders. They were originally introduced as Digital Options and basically, binary means 2 values and in the case of finance mean up and down. It doesn’t take a genius to realize how flawed the binary options industry is nowadays. Internet marketers have destroyed the markets by flooding it with misleading information and products. Doing a simple search on Youtube or Google will yield 100’s of binary options scams.
Binary options are very simple option contract with a fixed risk and fixed reward. These options are called binary options because there is a “one or the other choice” and a one or the other payout after the option expires. One or the other choices include up or down, or touch and no/touch. In computer code binary means 1 or 0, or one or the other.
The way a binary option works is from the traders perspective (yours) is that you choose whether or not a certain underlying asset (a stock, commodity, currency etc) is going to go up or down in a certain amount of time. You essentially bet money on this prediction. You are shown how much money up front you will earn if your prediction is correct. If your prediction is wrong, you lose your bet and the money risked. If you predict correctly you get your money risked back PLUS a return. These returns usually are between 70-85%.
A brief example would be that you predict the price of gold to rise from it’s current price of “$1612.75” one hour from now. The winning trade offers a return of 80%. You place a $100 trade on this idea.
One hour from now the option contract expires (closes) and the contract is graded as a “win” or a “loss”, or “in the money” / “out of the money”. Gold goes up to $1613, you predicted correctly. You get your $100 back and a return of 80% – or $80 for a total of $180. Even though gold only went up a tiny amount, you still earn the 80% return. Magnitude of price movement is not a factor in the amount of your return.
Key Ingredients Of A Binary Option Trade
All of the different binary option contracts have these three key ingredients that traders need to take note of. They are the expiry time, the strike price, and the payout offers.
The expiry time is simply the length of time from the moment you ‘buy’ the option contract until it closes. This can be as fast as 60 seconds or as long as a month. The majority of traders are trading the short term binary options, anywhere from 60 seconds to 30 minutes.
The strike price is the price that you were able to enter the trade at and this is the price that determines whether or not your trade is a winner or a loser. In the brief example above, the strike price is $1612.75. This is the price that gold needed to close at above in order to win this trade.
The payout offer is the return that binary option broker is offering to you. In the gold trade example above, the payout offer was 80% for a win and 0% for a loss. Some trades do have a return percentage for losses, typically up to 10% although this is broker and trade dependent. The payout offer is known up front before risking any money.
Enough theory, let me introduce you to #24Option.
24Option is one of the first Binary Options Brokers to arrive in 2010. 24Option is regulated and uses TechFinancials Trading Platform, which is considered one of the best trading platform available to date. 24Option has superior payout which’s up to 95%, this’s significantly higher than other Binary Options Brokers which offers payout varying between 71% to 89%. In order to start trading with 24Option, traders need to deposit a minimum of 250$.
24Option offers a very good range of underlying assets. From the day they started, they’ve continuously added more assets in their trading platform, which’s a good sign for future. They have both Forex and Stock majors, which I think would be enough for the big portfolio trader. They also offer some Asian Stocks and Indices, which is good if you trade from Asia. There’re well enough European-based stocks and indices in my opinion.
Their reliability is top notch. It’s important to note that 24Option is regulated by FSC, it means that your money is in safe hand; if there’s any unexpected circumstances happens, your deposit is under protection of the law.
Related article: 24option und Boris Becker
