Binary options are investments based on short-term projections. As with all trades,
investors place their bid with the hopes of it being a financial success.
In the world of binary options, trading involves taking a view on if the price will
rise or fall once it expires, which often ranges from hours to days. On GlobalOption,
investors can choose to trade across a wide range of asset categories – including
stocks, indices, future indices, commodities and currency pairs.
After researching the selected asset, investors need to select if the asset will
rise or fall in price upon expiration. If investors believe that the asset will
rise in price, they need to execute a CALL option. If the opposite is true, they
need to execute a PUT option.
The term “in the money” is used in binary options trading when an investor is successful
in the view they have taken. The result of having an in the money option is an investor
will receive the financial return which was noted before they placed their bid.
The opposite of being in the money is being “out of the money”, where the investors’
view is incorrect and no financial returns are obtained by the investor.
Every investor wants to have an in the money option, so here are a couple of examples
to clarify this position.
An investor who executes a binary call option sees the market or the underlying
asset as moving in an upward direction at that moment in time. In this scenario,
the investor is in the money when the price of the option is greater than the exercise
price.
Similarly, if an investor executes a binary put option they believe that the asset
or market will move in downward direction. An in the money option will result in
positive financial gains for the investor when the price of the option is lower
than the exercise price.
An in the money option is what all traders work towards when executing their binary
options strategy. By taking the time to understand binary options and develop your
own strategy, you can achieve financial results that you never dreamed of.