If you’re just getting started with binary options you might be a bit confused. Once you learn the basics you’ll find that investing in binary options is actually quite easy.
Let’s take a look at how they work.
Binary Options – How They Work
There are different types of binary options but the most popular option is the high/low.
With the high/low option you’re guessing whether a particular asset will go up or down in value. This asset could be a stock, commodity, or other type of security.
If you’re decision is correct then you win a return on your money. If you picked wrong you could potentially lose all of your money.
When it comes to binary options there are three terms you need to be familiar with.
- Call Option- you would place this if you believed the asset was rising
- Put Option – you would place this if you believed the asset was falling
- Strike Price – for the call option a strike price is when the security can be bought. For put options the strike price is when securities can be sold.
You’ll be placing either calls or puts when you’re trading binary options. The strike price terminology will also come up with certain types of options.
Other Types of Binary Options
We’ve already went over the most popular type of binary option, the high/low. Here are some others:
The 60 Second Option – This is just like the high/low option only you have sixty seconds to decide the fate of your asset.
One Touch Option – The one touch option is an investment vehicle that offers high returns. With this option you’re betting that the asset will reach a strike price. If you’re correct you’ll receive a return.
The Boundary Option – Just like it sounds with the boundary options you’re setting boundaries. You pick a high and a low point and if your asset stays within those boundaries you get a return.
Developing a Binary Options Strategy
There’s more to binary options that just guessing. In fact experience investors have a binary options strategy.
Once you get some practice in and develop a strategy you can diversify your investments to carry less risk.
Have you invested in binary options?