Welcome to All-Binary-Options
The goal of this website is to explain to you what binary options are, what strategies to use when working with them and which brokers offer you the best binary trading. On this page we will show you what a binary option is. To learn about strategies please go to the Strategies and Advise Page and to learn about Brokers please go to the Brokers Page.
What is a Binary Option?
A Binary Option (or Digital Option) is an option with a fixed profit/loss rate. This might sound complicated but is in fact very simple. It means that when you buy the option you already know how much you will potentially win or lose at the expiration of the option. Let's look at an example.
You see that the price of the EUR/USDis currently at 1.24000 and you believe that by the expiry time of the option (usually up to one hour) the price will be above that. So you buy a “call”-option for $100. The option offers a 60% payout. That means that at the end of the hour you will either receive $0 if you end out-of-the-money, or you will receive $160 if you are in-the-money. Lets say that at the expiry time the EUR/USD is at 1.25000. Your option ended in-the-money and you received $160, meaning you made a profit of $60.
As you see, a binary option allows you to speculate on the price movement of a certain asset without owning the asset. This allows you to make profit even if the price drops. Lets look at another example.
You see that the price of crude oil is at 87.800 and you think the price will end bellow that at the expiry time of the option. You buy a “put”-option for $200 that has a payout rate of 80%. That means that at the expiration time you will receive either $0 if you end out-of-the-money or $360 if you are in-the-money. At the expiration time crude oil is at 86.400. You option ended in-the-money and you received $360, meaning you made a profit of $160.
As you can see from these examples your potential profit and potential loss are predetermined so you always know exactly what to expect. You are in full control of the risk that you are taking and you know exactly how much profit you can make. Because of the predetermined win/loss and because of its simplicity Binary Options are very popular with beginning traders who have little or no experience in online trading.
Most platforms that deal in binary options allow you to buy options with an hourly expiration meaning that the expiry time is always at the end of the trading hour. So if you buy an option at 14:20, it will expire at exactly 15:00. Some platforms also offer 15 minute or 30 minute options.
Binary Options are best suited for highly volatile markets, because there has to be a certain amount of movement in a relatively short time frame, making them perfect for generating profit in a crisis situation like the current global crisis.
To sum up. Binary Options are easy to work with and transparent, making them perfect for traders with little or no experience. Because of their potential to generate profit on a volatile market and because the offer the same profit on an asset that increases in value as on an asset that decreases in value it is the perfect tool to be using in the current global situation.