All or Nothing Options
All or nothing options have become much of the norm in recent years. However, the onset of binary options has changed this. Many people have been trading all or nothing options over the years due to the fact that there is the possibility of making very high profits. Making these profits does really depend both on luck and skill, and even if you make profits a few times with all or nothing options, the long term may be different. This is due to the instability of the global financial system. We’ve all heard about the worst economic recession since the Great Depression and the collapse of Lehman Brothers. Additionally, with the debt crisis rocking the Euro due to credit ratings within countries such as Portugal, Greece, Ireland and even Spain is seriously threatening the future of the Euro. In finance, everything has knock on effects, and people that have their money in all or nothing options can be seriously affected. This is the main reason why binary options are now more popular than all or nothing options.
American vs European Options
Binary options are a very popular investment strategy for those of you that want to make big money today. However, you need to understand the underlying factors surrounding both binary options and other types of options in order to help you trade binary options more efficiently. It is true that binary options are the most dynamic types of investments today, as they are so widely available. In addition, as they are tailored to the everyday man or woman, it’s no wonder that everyone is try to get on the bandwagon. Now we will look at American vs European options
The binary option expiration is the time at which the binary option expires. Actually, there are many variations to this meaning, what actually determines the binary option expiration and the consequences of both the correct and incorrect binary option expiration. When trading binary options, you will always have to face the binary option expiration. Regular options themselves may or may not have expirations. However, in all cases, binary options always have expirations. This is good for you to know from the outset, as you will need to understand what you will deal with when it comes to both binary options and binary options expirations.
A binary option is when a buyer enters into a contract to purchase an underlying asset at a fixed price at a pre-determined time in the future.
Different from buying stocks and shares outright, with a binary option you are purchasing the right but not the obligation to buy shares of a stock and with its “All or Nothing” outcome the buyer is always aware of their losses from the start.
The potential loss or gain is determined by the amount invested by the owner and there are only ever 2 possible outcomes. If the option expires in-the-money the owner receives a 65-71% payout or if the option expires out-of-the-money the owner generally receives nothing, although there are a select few binary option platforms which offer a 15% return on all out-of-the-money results.
For example, if a buyer were to purchase a $100 option of XYZ Ltd with a 70% return rate promised of that chosen stock, an in-the-money result at the time of expiration would promise a $170 payout ($70 earnings plus the original premium of $100). If the result was an out-of-the-money finish the buyer would not lose more than their original premium of $100 and in some cases cold walk away with $15 (15% out-of-the-money payout).
Binary Options Brokers
Binary Options Brokers or binary options trading platforms are online internet based sites whereby investors can trade in binary options from the comfort of their very own computer screen. Each broker is individual to the next, each offering investors a plan with varied attributes.
Things to consider when choosing a binary option broker for your investing route are things like whether there is a sign up fee, a minimum trade amount and what kind of mark-up it offers on returns. A bit of research into different brokers could leave you with higher earnings and fewer losses.
Binary Options Trading
Binary Options Trading is a type of trading that allows investors to partake in stock, commodity and currency pairs trading, just with less risk and smaller premiums. Different from purchasing stocks, with binary options trading you are merely purchasing the right, but not the obligation to the shares of the stock.
It is a lighter option that some investors prefer as the payout is determined by the direction the stock moves and not the amount of movement in the price. This “all or nothing” simplicity offers only 2 possible outcomes and the buyer is aware from the off-start what they their losses could amount to.
Generally, if the outcome is an in-the-money result the payout to the buyer is a 65-71% return plus their original premium back.
If the stock were to expire out-of-the-money then the buyer would normally just lose their premium although there are companies that offer a 15% return on all out-of-the-money results.
Binary Options Trading Platform
There are many different types of Binary Options trading platforms. All web-based, they allow investors to trade binary options on selections of stocks, currency pairs, indices and commodities. Each trading platform competitor offers unique trading benefits to the investor as they each contend to be the most worthwhile trading utility for customers.
There are those which offer small pay-outs for all out-of-the-money results, rather than a total loss altogether, some who reduce any excess charges that might have otherwise been more costly, and of course, each trading platform has its very own selection of assets to choose from when investing. Therefore, it is useful to invest time when choosing a binary options trading platform that offers the most.
Binary Options Trading Strategies
When it comes to binary options, there are so many binary options trading strategies that you can trade from. The binary options trading strategy that you actually decide to trade with in the long run is really important. For now, you can read up on numerous binary options trading strategies that you can add to your everyday binary options trading life. Binary options trading strategies may include making the most money, Call and Put, the right expiry or trading with the right asset.
Binary Options Investments
Binary options investments have become the natural answer to people’s investment problems in the last several years due to numerous reasons. The world has historically been full of many interesting investment opportunities. Many famous entrepreneurs and high-tech founders, such as Bill Gates, Michael Dell and many others have profited hugely from the stock market. At the same time, they have also made losses via the stock market. This has caused all types of panic in recent years, culminating in one of the worst recessions for many decades in 2007 initiated by the collapse of Lehman Brothers. When it comes to binary options investments, this is a perfect alternative if you want to profit in this uncertain financial world.
In binary options trading, a call option is what an investor purchases when they believe that the chosen stock will rise above the current price. For example, you decide to purchase a Call option for XYZ stock because you heard in a financial news report that the stocks are looking to rise. The current stock price is 3.2019 so by placing a Call option you are predicting that the stock will rise above this current price, even if only by 0.0001. If it does so, then this will be an in-the-money result.
A digital option or a binary option is an investing route in which the pay-out of the stock is pre-determined in the contract from the onset of the purchase. Also known as the “all or nothing route”, when an investor purchases a digital option there are only ever 2 possible outcomes; 1.
An in-the-money result will earn the investor the fixed return plus their original premium back or 2. An out-of-the-money result will deprive them only of their original premium, and in some cases even compensate them with a 15% return.
For example, you decide to purchase a $200 Call option of stock XYZ which you believe will rise above its current price of 1.2209. The fixed return for this option is 70%. The stock finishes on 1.2211, 2 points ahead of the original strike price and so you would now receive a pay-out of $340 ($140 of earnings from the fixed return and $200 of your original premium).
If the stock expires on anything below the original strike price you would only lose your original premium of $200, never more. So we see, different from purchasing actual stocks outright, digital options offer security to investors who would rather not rely on how well the stock is necessarily doing, but rather on simply guessing which way it is moving.
Understanding the way of the financial market will strongly determine both your intellectual knowledge level and the accomplishments you will have as an investor. When it comes to the financial markets, there is so much to follow and much that is relevant to all types of investments. Without a thorough knowledge of the financial market, you will be very unsuccessful in the modern word of investing.
The 21st century carries with it additional risks, as was demonstrated by the most recent economic crisis that began at the end of 2007. The whole point of the following analysis is to try and successfully integrate the financial market with binary options. This will be demonstrated to prove that in order to be a successful binary options trader; you will need to be a constant follower of what occurs in the financial market. Please note that there are other factors apart from the financial market that will determine the success rate of your trading strategy. But it is important to always remember that detailed knowledge of the financial market is the key ingredient to achieving success in binary options and even other types of investments across the board.
Fixed Return Options
In binary options trading, fixed return options offer many investors a safer way to invest in the stock market than conventional stock investing. The benefit to the investor of making a purchase with a fixed return is the security of knowing exactly what they would earn if the option finished in-the-money.
For example, if you purchased a Call option of $100 of company ABC that offers a 70% return for in-the-money results, you would know that if you struck lucky you would definitely walk away with $170 ($70 of the 70% return plus your original $100 premium).
Many investors prefer having this foresight when investing so that they can maintain their gains and possible losses without any unforeseeable major damage.
In binary options trading an in-the-money result occurs when the finishing price of the chosen stock to invest in will earn the investor a pay-out. When purchasing a Call option an in-the-money result would occur when the price at the time of expiry is higher than the original purchase price.
When a Put is purchased an in-the-money result occurs when the expiry price is lower than the original purchase price. With either type of option, the difference in price, whether higher or lower, only ever needs to be as small as 0.0001 for a pay-out.
When making an investment, you are basically making a deal with an amount of capital chosen by you, with the desired outcome earning you a mark-up on your original sum.
When you invest in regular stocks you are actually buying a piece of ownership into that company or business and so have claim to a part of their earnings and assets. Therefore, if the chosen company is not doing so well, your ownership would be worthless.
Different from stock investments, when you invest with binary options trading, instead of buying stocks out-right you are simply purchasing a contract to the asset which claims you the right but not the obligation to purchase the asset. So instead of waiting for a lucky break in your chosen stock like in regular purchasing stocks, with binary options you are simply predicting the movement of the stock, whether it will rise or fall from it’s original purchase price.
The amount you could earn is pre-determined from the onset and so even an out-of-the-money result would lose you nothing more than your original premium. Also known as a ‘no tears’ investment.
One Touch Option Trading
Binary options have taken the online trading world by storm. With the opportunity to make several hundred percent profits with just a simple forecast, it’s no wonder that everyone is talking about binary options. The latest development in binary options has been one touch option trading. Firstly, there are many different options on the table with binary options trading that can already help you earn vast returns on your money. The onset of one touch option trading has changed things. It actually makes these other entire potential profits look minimal. But we should look at things a bit closer, because if you play your cards right and read the following very carefully, you can make high attractive profits from one touch options trading too!
If you want to know more about options, then you should know what are options spreads. Many options do have spreads and there are some that don’t. Binary options are at the top of the trading world today and they don’t have options spreads. On the other hand, there are those options that have been popular in the past and are still fairly widely traded to some extent that do have options spreads. When trading with options spreads, this can strongly determine how much money you make. Also, many brokers out there say that they don’t charge commission. So when you do decide to ask them how they make their money, they often say through options spreads. Options spreads is something you need to know about when trading options. Overall, there are a lot of negative aspects of options spreads that we will look into now that has led many people to opt for binary options as the chosen trading mechanism.
When trading in binary options an out-of-the-money result is when the price of the chosen asset will not earn the investor anything at the expiration time.
For Call options an out-of-the-money result would occur when the expiry price in lower than the price was at purchase and at the opposite end, an out-of-the-money result for a Put option would occur when the expiry price is higher than the price of the chosen asset at the time of purchase.
When trading in binary options, a Put option is purchased by the investor when they believe that their chosen stock will expire below the original purchase price, even by only 0.0001.
Let’s say, for example that you decide to purchase a Put option of company XYZ because you have learned that their stocks have taken a sudden turn for the worst. The current price stands at 2.0067 so even if the price finishes on 2.0066, this would be an in-the-money result and you would earn the pre-determined return and your original premium back.
In binary options trading, a successful investment would come in the form of an in-the-money result, earning you a healthy return. For example, let’s say that you purchase a $300 Call option of stock XYZ because you heard that it was doing well and is on the rise.
This particular stock offers a 70% return on all in-the-money results and the price currently stands at 2.0972. As predicted your informed decision pays off and the stock finishes at 2.0978. This successful investment leaves you with a pay-out of $510 ($210 of the 70% return and your original $300 premium back).
When trading in binary options an underlying asset is a financial asset that’s price depends on another derivative. In other words it is an asset that the investor will purchase rights to and earning money from through predicting its movement, as in rise and falls in the market.
In binary options trading underlying assets come in the form of currency pairs such as AUD/USD and EUR/GBP, commodities such as Gold and Copper, indexes like the FTSE 100 and the S & P Future and stock such as McDonalds, Vodafone and Coca Cola.
In the following analysis the issues that will be discussed are the key differences that distinguish both binary options and vanilla options. Both types of options are very familiar to the modern-day investor. However, there has often been much confusion between the two. Now is the time to get to the bottom of all of this. People often trade options in general to earn very high returns.
With this comes large risks, but these risks are what investors are willing to take. As they say, “no pain, no game”. When speaking of regular investments, some people prefer stocks or currency investments. The problem with these is that maturity can take a long time. In other words, the amount of time that it can take to earn the rewards that you deserve can take a very long time. However, vanilla options, and to a much high extent binary options has turned all of this on its head.
Currencies are traded in pairs, trading one currency against the other. Currencies rise and fall according to the markets demand for it, rising if the market’s demand for it is greater than the available supply and falling if the demand is lower than it.
All financial trading of currency pairs takes place on the Forex, or the Foreign Market Exchange. Currency pairs include the likes of AUD/USD (Australian dollar against US dollar), EUR/JPY (euro against Japanese Yen) and GBP/USD (British pound against US dollar).
A lunchtime news report advises that the British pound is rising against the US dollar. This could be a great opportunity to place a Call option on GBP/USD with one-hour expiration, this pair representing the price of the British pound in US dollars.
With the benefit of binary options having short expiry times, there is a good chance that this trend will continue long enough for you to benefit from a pay-out of an in-the-money result before the tide turns again.
The Forex, or the Foreign Exchange Market is an international market whereby foreign currencies are exchanged for one another. One of the largest financial markets in the world, it operates on a 24-hour basis through a non physical global network of banks, corporations and also individual currency traders.
There are those who use the Forex for non-trading purposes like multi-national corporations for example who use it to pay wages to its employers in currencies other than that that they trade in.
Then there are the traders who profit on the movement of currencies against each other i.e. currency pairs such as EUR/GBP (the euro against the pound) and AUD/USD (the Australian dollar against the US dollar), like when trading in binary options.
In binary options trading, when trading in Forex options you are predicting the movement of set currency pairs like EUR/GBP (the euro against the pound) or AUD/USD (the Australian dollar against the US dollar).
These currencies make up one of the largest financial markets in the world, otherwise known as the Forex, or the Foreign Exchange Market where traders can deal 24-hours a day, 5 days a week. Trading on how well a particular currency is doing alongside another, traders can make informed predictions on currency pairs and with the added comfort of short expiration times that is common when trading in binary options.
For example, you may hear that the AUD is rising against the USD and is looking to stay in this position for the very near future.
You see that the AUD/USD is currently trading at 1.90081, this pair representing the price of the Australian dollar in US dollars and so put a $200 one hour expiration Call option which relies on the pair rising, even by only 0.0001. With a 71% return you are in a good position of earning a pay-out of $342 ($142 earnings plus your original premium of $200). A good result with little risk involved.
Forex Options Trading
When dealing in forex options trading you are predicting the movement of currencies against each other, comprising as one of the largest profit gaining financial markets in the world, the Forex (Foreign Exchange Market). Trading is always done in currency pairs. For example GBP/USD (British pound against the US dollar), this pair representing the price of the pound in US dollars.
When trading binary options on the Forex, you are predicting the movement of these currency pairs. For example, with information that the GBP will steadily fall against the USD over the next 24 hours, you place $100 on a Put option with a one-hour expiry time.
The currency pair already stands at 1.55508 and the option offers a 70% return on an in-the-money result. If the GBP/USD pair expires at even 0.0001 below the original price, even at just 1.55507, you would be collecting a pay-out of $170 ($70 return and $100 premium back). No fuss investing.
When it comes to the global financial system, stock exchanges are pretty much what signify global economic growth. It is true that GDP, GNP, RPI, CPI and other economic indicators do have much say in what is happening in the global economy, but stock exchanges are really important! What has been significant in the past 100 or so years? Stock exchanges! The 1920s are known as the roaring 20s, due to tremendous growth of global stock exchanges.
This came to an abrupt end when global stock markets crashed – The Wall Street Crash. Basically, the domestic stock market/stock exchange represents the health of the domestic economic and the global stock exchanges represent the health of the global economy. In hindsight, many people have lost and gained money from stock exchanges. But due to the instability that keeping your money in stock exchanges entail, a growing number of individuals have decided to invest their money in binary options.
When you purchase a stock option you are entering into a contract that deems you the right, but not the obligation to its shares.
In other words, you are not physically purchasing a stock outright and relying on the stock doing well, you are simply predicting the direction that the stock will move and betting on this outcome.
So let’s say you purchase a $100 stock option of company XYZ, the price currently standing at 3.0029, and offering a 70% return for in-the-money results. You see some news that informs you that this company is on the up and is looking to stay that way for now.
With this news you could purchase a Call option on company XYZ and if the price of this stock is anything above the original strike price of 3.0029, even only by 0.0001 then that in-the-money result would earn you the return of 70% plus your original premium back.
So, different from buying single stocks of companies for the price of $XYZ then hoping and praying for a single triumph, binary options make it easier for us to partake in the stock market, the initial premium being the extent of the loss for out-of-the-money results and in-the-money results relying merely on a 0.0001 change in the right direction.
Stock Options Trading
In binary options trading, trading in stocks is always a popular choice for investors. With big, well known names featuring in the market, it is easy for investors to keep up-to-date with breaking news and sudden changes and fluctuations to their chosen stock.
Let’s say, for example that you hear some breaking news on the lunchtime financial report that XYZ Corporation has taken a fall for the worst due to record low sales and is looking to continue this way for now.
This is the kind of investing opportunity that presents stock options trading as a smart way to dabble in the stock market.
By purchasing a Put option, which relies on an outcome lower than the original strike price for an in-the-money outcome, you could put yourself in a good position to earn. As most binary options have very short expiry times, most commonly just one-hour, any change in price direction is limited, giving the investor an added sense of security that is appealing to all types of investors, old and new. Easy to follow with minimal risk.
A stock is a small share or piece of ownership of a chosen business or company that gives the owner claim to a share of their earnings.
Examples of types of stocks you could purchase range from anything from banks and insurance companies to software companies and fast food chains. In binary options trading, instead of actually purchasing a stock outright at the set price, you are merely entering into a contract that gives you the right, not the obligation to its shares.
Instead of profiting by how well or how badly the stocks are doing, when you purchase a stock option in binary option trading, you are just predicting the direction of movement of the stock and not counting on the stock necessarily doing well to bring the money home.
These types of binary options are comprised of not just a single stock but of an index of many stocks, giving the trader diversification and opportunities to trade in particular sections of the market on a larger scale.
The market exposure index options give the investor is a winning tool and their growing liquidity is proof of this.
he simplicity of trading in index options comes without having to deal with individual stocks in several different transactions. Instead you are trading on a single index option such as the S&P 500 which includes 500 leading US companies, offering to be useful for those investors who have an idea of where the markets are going but who don’t wish to get too involved in the finer details.
Other index options include the likes of the FTSE 100, Nasdaq, IBEX 35 and the Dow Jones, all of whose price movements are easy to follow in daily worldwide financial news reports, another selling point for index options.
Index Options Trading
This type of binary options trading deals with index options( index options) that are not just single stock options but indexes comprising of many stocks.
Well known examples include the Dow Jones, Nasdaq and FTSE 100 to name but a few and each index provides the investor exposure to larger sections of the market than with single stocks.
The selling point for these options is the coverage of stocks in just a single transaction, useful for those with little patience or limited knowledge of single stock options but whose knowledge might stretch to the better known and more frequently referenced index options.
This is the plural term for a singular index. In the stock market, indices are groups of stocks put together in particular ways, representing a portfolio of stocks or commodities. Some indices are grouped nationally, like the British FTSE 100 or the German DAX and are made up of large national companies, and some are global like the S&P Global 100, comprising of companies disregarding their country of trade.
Indices or index options can be a very practical and profitable path for investors when trading in binary options, many investors referring to them as the “no fuss” route. Issues that become involved with individual stocks are kept to a minimum and the progress of these options is easy to follow with their movement widely covered in the media.
The daily lunchtime financial news report today states that the FTSE 100 is rising steadily. This presents a window of opportunity to profit from this current movement before any further change is apparent.
With this news you could purchase a Call option on the FTSE 100 to rise above its current price of 5,302. 980, even if it’s just by 0.0001. If the expiry price finishes in-the-money you would get a pay-out of 65-71% return, the worst case scenario leaving you minus your original premium.
A commodity is a physical raw substance that is sold or bought by investors across the financial market. Examples of commodities are coal, petrol, metals such as gold and copper and food such as grains and milk.
They are products for which there is always a constant demand and such as, there is a constant supply of. In binary options trading commodities are seen by many as a safe and steady bet for which to invest in, retaining a fairly universal price due to their steady functions in our day-to-day lives.
When investing in commodity options you entering into contracts that give you right, but not the obligation to the movement of a commodity stock in the market. This means that, instead of buying stocks outright and falling victim to the either profitable or non-profitable price outcome of it, you are simply predicting the movement of the commodity and whether it will rise or fall.
The losses and gains are clear from the onset and you will only ever lose your original premium, whether the movement in stock is big or small.
Popular and well known commodity options include gold, oil, copper and coal. Commodities are raw or primary products, for which there is a constant supply and demand for across the market, this very much determining their price and making is easier to trade against each other based on current affairs.
I.e. a major oil leak in the sea would affect the price of petrol compared to an international boom for the demand of gold.
Commodity Options Trading
In binary options trading, trading in commodity options allows investors to trade in some of the most well known commodities in the market, such as gold, oil, silver and copper. Thought by many as an easy market to trade in, there being only forty commodities to trade in, and easy to follow, with movements often relating to world affairs, it is an attractive option.
You may read a commodity news report that copper prices have fallen for the first time in 3 days which gives you a strong feeling that this commodity will not be rising any time soon. You decide to place a $200 Put option on copper with a one-hour expiration time and that offers a 70% return on an in-the-money result.
Copper currently stands at 334.161. By the time of expiration if copper finishes below the strike price of 334.161, even if by only 0.0001, you will earn a healthy $340 ($140 of the 70% earnings and $200 of your original premium back).
Even if copper finishes out-of-the-money, when trading in binary options you will never lose more than your original premium, in this case $200 and some binary option trading platforms even offer a 15% on all out-of-the-money results.