If you are considering investing money in shares and stocks, you would do well to check out binary options trading that is all the rage today. This is one option where the type of payoff is either all or nothing i.e. you either get full payout against your investment or you gain nothing at all.
As competition in the Binary Option market increases, brokers are offering more and more options to lure investors. However, irrespective of the option you select, do remember that the chances of risk or reward from a binary option transaction is always known from the very outset.
The most common type is the high-low option which is also terms as a fixed-return option. This is because such type of binary contract has a fixed expiry date or time and also a strike price.
As a trader, you are supposed to purchase a ‘call’ on the contract if you feel the market is rising. Similarly, you are expected to purchase a ‘put’ if you think the market is crashing. Understandably, your ‘call’ will make money if the price is above the strike price at expiry time and your ‘put’ will gain if the price quoted is below the strike price at expiry time.
Another type of binary trading is the one-touch option wherein the value of your contract just has to touch a predetermined level before expiry time for you to make money. The level or target can be both below or above the current price and you can select whichever you feel is more likely to reach the predetermined level earlier before expiry.
The ‘range’ is another common category of binary options. In this, you are allowed to select a price band within which the contract will trade till it reaches expiry time. You will gain or receive payout if the final price stays within the range but if it moves beyond, you are likely to suffer a loss.