An option is a contract or agreement between two parties to purchase or sell an asset at a fixed price and fixed time in future. It is called an option because the buyer/investor isn’t obligated to complete the transaction. The act of engaging in trade of the guarantee or asset is called trading options or option trading. At present, trading options has become a very popular form of trade in the financial market. However, it isn’t a get-rich-quickly scheme where you can make a handsome amount of money instantaneously. Only if you see the basics and are willing to take a risk, can you gain huge profits by trading options over time.
Binary option is a form of option in which there are just two possible outcomes I.e., where the payoff is either some prefixed amount of money or asset or nothing at all. Accordingly, binary options can be of two types-cash-or-nothing binary option under which the investor gains a fixed amount of cash if the option expires in-the-money and the asset-or-nothing binary option which pays the underlying value of the guarantee under similar circumstances. Binary options trading is an easy way of getting that participate in the financial market by making short-term investments with low monetary value that yields high profits. There are many benefits to trading binary options when compared to more traditional options trading. These are as follows.
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Small Capital and High Return-Unlike other conventional stocks and options, binary options generally require a small investment and can yield up to 75% – 81% of the original capital.
Away from final salary schemes, most pensioners take an annuity for their retirement income but there is another option. We explain about keeping your pension invested through drawdown, the catches and whether you can do it. The financial decisions you make at retirement will impact the rest of your life, so it’s worth considering all your options before taking any major steps. The conventional route for most pensioners is to take out an annuity – but there can be downsides to …
Short Term Investment-While traditional options take several years to mature, the majority of binary options expire within a week, one hour, a day, or even less than an hour. This means that an investor can make a huge profit in a short period of time basis of a single contract.
You can set it and forget it with binary options trading. I really like the freedom these little option plays give me. I have one strategy I call the’ Ten Minute To Win It’ trade. Many of my students LOVE that strategy. One man I taught to trade it takes it every time it comes up. Yet, even he doesn’t have to sit in from of the team all day. He simply comes back for about 5 minutes each hour when the trade normally set’s up. He takes it every time.
Calculated Risk and Reward-One of the biggest pros of binary options trading is that the profitability of initial investment is predetermined. From initiation of the contract, the amount of potential profit or loss is known. So you can choose to reduce the risk factor and maximize your gain.
Advantage in Volatile Markets-Trading binary options has an immense advantage in volatile markets, as it provides a more or less safe way to keep on investing. While in traditional investments huge losses can be incurred by volatility of the markets, the fixed rates of binary options allow you to trade binary options in a very profitable way in the same circumstances.
Thus, binary option has decreased the exposure to risk while increasing the likelihood of earning huge profits. It may be found that it isn’t difficult to trade binary options if you’ve got a sound knowledge of all the parameters of the trade and can plan your strategies accurately. But all things said and done, any form of financial investment carries risks and one should evaluate the markets carefully and do his homework thoroughly before investing in financial markets.