Binary Options
There are only two possibile outcomes of a binary option - either a full payoff
or nothing at all. A fixed-return option (FRO) and binary options are similar to
plain vanilla options in that they are purchased based on the belief that the market
value of the underlying asset will either rise or fall.
Underlying Assets
The payout of a binary option is dependent upon the market value of the underlying
asset at the time the option expires relative to that asset's market value at the
time it was purchased. In the case of a binary CALL option, the underlying asset's
market value must be higher upon expiration than it was when purchased. Conversely,
in the case of a binary PUT option, the underlying asset's market value must be
lower upon expiration than it was when purchased. Investors choose which option
to purchase based on the direction they believe an asset's market price will move
in the foreseeable future.
The type of binary options investors purchase (CALL or PUT) reflects a prediction
about how the financial markets would move. For instance, if Google stock is priced
at $400 on Monday, and an investor believes that its price will rise by the close
of the market on Friday, that investor will purchase a binary CALL option. If the
price rises as expected, the option will be successful (in-the-money). By contrast,
if an investor believes that Google stock would decline in value, that investor
may purchase a binary PUT option, which would be in-the-money if the price does
decline.
Expiration
Binary Options: Variable terms of expiration: at a definite hour on a particular
day, at the termination of trading on a business day, and within a number of minutes
within a certain hour from the time of purchase.
Payout
Plain Vanilla Options: Payout depends on the performance of the underlying asset
relative to the strike price.
Binary Options: Set forth at the time the option is purchased.
In-The-Money
Plain Vanilla Options: The market price moves above (call options) or dips below
(put options) the strike price prior to or upon expiration.
Binary Options: The market price of the underlying is greater upon expiration than
at the time of purchase (call option) or less than the market value at the time
of purchase (put option).
Execution
Plain Vanilla Options: Exercise is permitted prior to expiration, in most cases.
Binary Options: Options may be exercised only upon expiration.
Right to buy
Plain Vanilla Options: Provided that the option is in-the-money, holders may, depending
on the option's terms, have the right to convert its value into equity, or stock,
prior to expiration date.
Binary Options: Options bear no terms permitting conversion of value into stock.
Binary Options: Advantages and Trading Strategies
A binary option's true value is dependent exclusively upon the movement of the underlying
asset's market value in the forecasted direction upon expiration.
- Binary options trading is straightforward and simple to understand.
- With a preset cash award combined with a fluctuating market value for the underlying
asset, binary options bear a low level of risk.
- With the option of holding both put and call options, binary options may be used
as a basic tool for portfolio risk management.
- Global Options' web-based platform is conducive to the binary options market. This
is because with a global presence, binary options may be purchased at any time.
Investors commonly purchase call and or put options in response to the widely perceived
imminence of market trend reversals and price shocks. Such activity is generally
elicited by earnings announcements, company mergers, and takeover bids. News of
natural disasters and changes in the political climate may also account for a rise
in options sales. Regardless of whether investors believe asset prices will rise
or fall, options provide a way to capitalize on the uncertainty generated in the
market while guarding against risk. Though it is not possible to eliminate risk
using options, trading experience gives investors a better grasp of how to best
use options to their advantage.
Binary Options in World Financial Markets
Classified as "exotic options", binary options may be traded in the over-the-counter
market. The past several years have seen a growth in the issuance of binary options
alongside exchange-traded assets, such as stocks and bonds. For this reason, options
prices are calculated alongside movements in the market prices of these assets,
which serve in an underlying capacity. Pricing, though straightforward on the platform,
is a complicated process carried out for investors behind the scenes.
One-Touch Binary Options
One touch binary options differ from regular binary options in that their cash payoff
is dependent not upon the underlying asset's market price at expiration, but upon
the market price's having reached, or touched on, a specific price level at least
once between the time of purchase and the time of expiration. The outcomes are the
same as with regular binary options:
1) The holder receives the preset cash payout in its entirety as long as the market
price touches at least once on the price level specified in the contract.
2) The market price of the underlying asset does not reach the specified price level,
and the holder receives no cash payout at all.
One to uch binary options are a wise choice for investors who believe that an asset's
market price will attain a specific level at a specific point before the specified
expiration date.
One touch binary options can help Global Options clients earn returns of between
150% and 350%, Monday through Friday.
One touch options are available for purchase on Fridays, Saturdays, and Sundays
once trading hours have ended. This is because investors need to hold one touch
options until the next trading period begins.
Using a sampling method, one touch options are priced based on periodic calculations.
These calculations take place five times each week. For this reason, one touch options
are mandated to be sold standard price units.
As with standard binary options, one touch binary options holder are not paid until
expiration date, even though the success of the option might be determined in the
interim.
Terms and Cancellation Policy : There are no refunds
on the sale of one touch options, and the standard 10% return does not apply if
unsuccessful.