Betting on Binary Options

Binary options betting is one of the most attractive ways of betting on markets. There are only two possible outcomes – profit or loss and hence binary options betting is simple and easy to understand.

Binary options are predictions on how the market price of certain underlying asset such as stock, indce, commodity or forex will perform within a certain period of time. Trader may invest a certain amount and earn high returns if his prediction turns out to be correct.

Trader can earn profits upto 85% on his investment within one hour with binary options betting. It’s all or nothing aspect makes it more simpler and exciting betting option, while profit or loss is predetermined and hence it minimizes the trader’s risk. As compared to other types of trading, the money management and market knowledge depth required is minimum which gives the trader ample time to focus on placing winning bets. Hence the potential wins and losses are exactly known to the trader. Trader can place binary option bets on commodities, indices, currency pairs or stocks. Binary options betting can bring easy profits with low risk for new as well as experienced traders.

There are several benefits in binary options betting compared to spread betting. Binary options betting has known risk, if the underlying asset goes up, trader makes profit else loss. Risk is not more than the amount invested. Online Binary options betting are becoming more popular nowadays in financial markets as these instruments allow the buyer to trade with speed, ease and without any difficulties that are involved in trading offline options.

Binary options bets are placed in two basic ways. These are the call option and put option. Call is a right to buy the underlying asset or security at a certain price either on or before a specific date.  If trader feels that underlying asset will rise, he buys the call option. If the trader’s bet is correct and the price of the underlying asset is higher at expiration, trader can earn predetermined profits. Put is the trader’s right to sell the underlying stock or security at a certain price either on or before a specific date. If trader feels that underlying asset will fall from the current price, he will buy the put option.

Step by Step Binary Options

Binary options have emerged as interesting and valuable trading options for investors. In reality, binary options are quite simple as they expire at all or nothing. Before making an actual trade or choosing a binary broker, it is important that trader must understand the binary option trade. Let us discuss a typical binary option trade. Trader must follow the steps below to make a binary option trade.


Step 1: Trader has to choose between the different assets available for trade. Binary options are available in stock options, commodity options, forex options or index options.


Step 2: Trader must select an appropriate expiry time of an asset. Select your expiry time which may be the end of the nearest hour, day, week or month.


Step 3: choose whether you think the asset’s price will go above or below the current price. The price of an asset may constantly move up or down hence it is advisable that trader must have proper insight on the asset selected.


Step 4: purchase binary option for the desired amount and wait for the expiry time to show the asset’s price.


Binary options have two possible outcomes, above or below, also known as Call or Put.  A Call binary option is bought when an investor thinks that the price of his asset will rise above its current price. A Put binary option is bought when an investor thinks that the price of his asset will decrease below its current price.


In essence, binary options is a contract which offers buyers a right to buy but not the obligation, to buy an underlying asset before expiration date and time of the trade. Items being traded are called underlying assets and they are a variety of trading products. The flat price, at which the trader buys or sells at, is known as the strike price.


The reason behind growing popularity of Binary optionstrading lies in its simplicity and higher returns capabilities. A binary option trading is ideal for investors who are engaged in short-term transactions, since it offers the possibility of significant gains within a short period of time. Hence Binary options trading has became one of the most profitable and popular alternative to earn higher profits in the financial market.

Binary Options: Difference between Vanilla and Binary Options

Binary Options is relatively new trading option which with the right strategy can be used as an alternative income stream and investment tool as it can generate profits from 70% to 85% per hour. Online trading platforms are now trading in major International Indices, Stocks, Currencies as well as Commodities.


Let us differentiate between traditional Vanilla options and Binary options. Many traders are quiet familiar with vanilla options. They are regular options available on most of the binary options broker platform. Binary options on the other hand are new investing method; however their use is increasing at a huge speed.

What are the differences between two types of options?


Vanilla options have two types of expiry times either monthly or quarterly while binary options have more varied and immediate expiries of end of the hour, day, week or month.  The payout in Vanilla options will depend on the difference in the price change between the price of the asset at purchase and its current price while payout in binary options is fixed when the option is bought. Vanilla options can be executed at any time up to time of expiry while binary options cannot be executed before their expiry time.  To be in the money in Vanilla options, their price must have risen by a certain amount while binary options need only move a small amount in the right direction to be in the money.


Let us discuss binary option with an example. If a trader purchases $200 Stock binary option with a 80% payout, then at the expiry time he will either receive a $360 payout if his option expires in the money or nothing or certain percentage amount of compensation provided by binary options broker(depending on the binary option platform, this can be as much as 10%) if it expires out of the money. Hence the traders don’t have to pay more money then his initial investment which in this case is $200. Hence binary options are also called "all or nothing".

Binary Options trading – Choosing Binary options platform

Biggest factors behind any trade in financial market are risk and reward. In recent years, financial industry has developed new ways to trading which offers more volatility than conventional instruments such as equity or debt. Once such type of trading invented over recent years is binary options.


Binary options trading refer to a type of asset where the trader stands to gain a fixed payoff or nothing. By utilizing the appropriate trading techniques, trader has the potential to get higher returns within shorter time as compared to other regular options trading. This potential of higher profits brings the higher risk.  When trading binary options, the buyer of the option chooses whether he thinks the underlying asset will hit the strike price by the selected expiry time – this could be at the end of the nearest hour or the end of the day, week or month.


The important aspect to consider before investing is choosing binary options broker.  The following features one should look out when selecting binary options broker:

1.       Security: It is important that the trading platform is completely secure. Trader must look for a platform with 128 bit SSL encryption enabled.

2.       Web based platform: In today's world of connectivity, trader must be able to place a bet from various different locations. Hence it is important that binary options broker provide a online web based platform for trading.

3.       Minimum 60% to 85% returns: It is important to look out for the profits of 60% to 85% on investment. When trades successfully predict the direction of underlying asset, trader can make large amount of profits. However the exact percentage of profits depends on the binary options broker.

4.       Customer Service:  Investor must refer various feedbacks of binary options broker before signing up with them. Your broker must provide great customer service and enough guidance on market movement. Broker must have easy and simple deposit and withdrawal processes. If broker is missing any of these characteristics, investor must look for another broker. Appropriate guidance can be available from various online media such a binaryoption.com

In conclusion, binary options trading has lot in common with other trading platforms such as forex, but there are several unique traits that investor should be aware of.

Guide to Binary Options Trading

A binaryoption trading is one of the latest forms of trading and it is getting lots of attention from the financial market. The reason behind its popularity is its simplicity. Binary Options trading has a digital nature of trade and hence named as binary options. It is also called "all or nothing" trade. If you make a correct prediction of the underlying asset you can substantial profit else you loose almost your entire bet.


Let us illustrate binary options trading with a simple example. Suppose you purchase a call option of a stock at $100 with a binary payoff at $5000. At the maturity date, if stock trades above $100 you get your $5000 payoff. If it trades below $100, you get nothing. However some trading platforms provide you a compensation of 10% to 15% if you made the wrong call.


There are several types of assets on which a binary option bet can be made:  Forex, indices, stocks and commodities.

Forex binary options are also called currency binary options or currency pairs. They are made up of 2 currencies e.g. USD/EUR. Stock binary options are placed on stocks of individual company shares. For example, you place a bet on Stocks of Apple or Microsoft. The direction of movement of those stocks will determine the success of your bet. When you trade on index binary options, you trade on combined value of several stocks within that index. Index trading allows investor to gain exposure to wider section of market in single trade.


A trader must plan a calculative strategy for stocks, index, forex or commodity options trading. A well planned strategy will help in gaining high profits and reduce the degree of risk involved. Further investor must be equipped with the latest set of tools, such as live financial news, references to financial sites, live feeds. It will help the new investor to predict the direction of underlying asset. Once such tool is Binaryoption.com 


New investor must be cautious while choosing binary options broker. The important aspect while choosing binary options broker is the terms of contracts they offer. As the market is relatively new, many binary options brokers are not well established. It is therefore becomes necessary for the investor to investigate thoroughly about the binary options broker they are considering.

Trading Binary Options

Risk is an inherent feature in whatever business you pursue. This is slightly more if you choose the financial trading as your business, since here the chances of losing a lot of money, very quickly, are high. However, there are many options, that provide business opportunities with the risks obviously being there but still to a level that can be absorbed. Binary options’ is one such instrument of financial trading, where the element of risk is there, but to an extent that is bearable.

As the name specifies, the options in the name binary options, lets the trader decide whether to carry on with the trade or not. The binary aspect of the instrument points to the fact that the outcome of a binary option is either all or nothing. This denotes that a trader speculates on the price movement of the underlying asset, deciding whether it will end up higher or lower at the end of a predetermined price. The correct speculation of the price movement earns a payout of nearly 65-75% profit on the investment, which is made if the pre-decided condition is met or else he gets nothing, hence the name binary. The binary options are also known as digital options for the same reason that the trader might get all or nothing at the end of the expiry depending on whether his option ends “in-the-money” or “out-of-money”.

Simple binary options are the easiest instruments to trade the financial markets and the beauty of them lie in the fact that they can be used to trade multiple markets like the forex, the commodity market, the stocks and the indices as well. The expiration of a binary option is generally an hour, which means that traders do not have to wait until the end of the day, week or month for the maturity of their contract.

The payout percentage, which generally falls in the range of 65-75% of the investment, is offered by the broker, which is based on the probability of the happening of the specified scenario. This is quite high a percentage of profit if the option expires “in-the-money”. Another thing of relevance to be noted here is that in binary options trading, the payoffs are fixed and predetermined. The payoff is not determined by the magnitude of the change in price nor by the number of points did the price rise. Therefore, if the trader’s prediction is correct, even by a single cent or pip, he is liable to get his payoff. Hence, magnitude of change is not important, but it is the direction of price movement, which holds importance.

Some brokers also offer a return of 10-15% of the investment, if the speculation regarding the price direction is incorrect. Theoretically, the trader is not supposed to receive anything for an incorrect speculation, but to attract new traders and reign in the existing ones, many brokers offer this return. Therefore, the traders have some assurance of lot losing all the money and a return, though very small, is made.

Binary options offer many features to the traders for a successful trade. Moreover, there are many types of binary options, which provide a varied horizon of opportunities for the traders.

How to Trade Binary Option

Create a Binary Options Account

To begin trading binary options, you must create an account with a binary option broker.
There are several brokers including OptionBit, EZTrader and AnyOption , and you can read numerous reviews of binary option brokers at BinaryOption.com. Complex arrangements between exchanges and brokerages are not necessary for trading binary options, so setting up an account is usually as simple as registering and depositing funds.

Choose an Underlying Asset

When trading binary options, it is best to stick to markets with which you are familiar. If you have experience in trading Oil, then trade binary options on an oil asset; if you have been following Gold in the news, then trade a Gold option. Remember that binary options are merely a tool that you can use to  manage your investment and make high returns in a short period of time.

Choose Your Time of Expiration and Conducting Your Analysis

When you have chosen your market and asset, decide whether you want to purchase a binary option that expires  the next month, the next day, or the next hour. Then decide what direction you think the price of the asset will move by the time of expiration.  If you think price of the asset will be lower at the time of expiration, purchase a put option. If you think it will be higher, buy a call option.

Examine the Binary Option Return Make Your Investment
Pick the option that is most appropriate based on your analysis so far. If, for instance, you think that the price of Gold will be less in 24 hours, buy a put option on Gold that expires in one day.  Typically, if an the trader’s prediction was correct and the option expires in-the-money traders will receive a high return between between 75% – 85% of their initial investment. . If you find the terms acceptable, you can purchase the option for as little as $10 or as much as $5,000.  More advanced traders also trade multiple options in order to strategically be in-the-money.

You can learn more about option trading by looking at our Binary Option Broker Reviews.

www.binaryoption.com