🔄 Trading Binary Options -FAQ, Strategies, and Rules
Binary options (also called digital options) are financial instruments traded over a fixed period with a pre-set return. Binary options have only two possible outcomes: you're either in-the-money or out-of-the-money. A trader can earn a profit simply by predicting the direction of a price trend. It doesn't matter whether the asset's price moves 10 pips or 50 pips—whether it's a call or a put option—the potential profit is always the same. Every binary option that ends in the money pays out a fixed amount. Typically, binary options offer a payout of 70–80%. In addition, many binary brokers offer a refund of 5–15% if the option ends out-of-the-money.
Trading binary options is simpler than trading standard options because fewer factors influence their pricing. Unlike standard options, binary options offer specific payouts based on small price movements in the underlying asset.
What are the Underlying Assets?
Binary options can be based on a variety of assets including stocks, indices, bonds, forex pairs, and commodities. Among the most popular assets for binary trading are Gold, Oil, and EUR/USD.
How are Binary Options Priced?
Binary options are priced in a similar way to standard options. To decide whether to buy a call or put binary option, traders must consider three factors:
i) strike price
ii) current price of the underlying asset
iii) implied volatility of the underlying asset
