A binary option is an option that can function in two cases: it either provides income or brings nothing under certain conditions at a given time.
Binary options are one of the simplest and most popular trading tools. However, even common tools require knowledge about all kinds of aspects and details. To discover special features of binary options, we will review each of them.
What are the types of binary options?
In general, there are three main types:
- call and put options;
- оne touch and no touch options;
- in and out options.
Call and put ones account for forecasting rise and drop in price towards the initial cost of the option. We buy call options in case of growth and buy put options in case of decline.
Оne touch and no touch options are required to predict whether the price will reach a certain level up or not to expiration. When the price reaches the necessary level, its further movement won’t be quite important.
In and out options predict a corridor where the price will move up to expiration or up to going beyond the corridor.
Other types of binary options
Other types include Up/Down, Range and Spread binary options.
Up and Down
This kind of binary options is quite popular. It predicts recession and boost of the price at a certain time of expiration.
should choose ‘up’ if you are sure that the price will be increased at least by one point during expiration or ‘down’ if you believe that the price will fall.
Range
kind is one of the simplest options. Even its name shows its concept: the price should be fixed in a certain range during expiration.
is also a Boundary tool: if the price moves beyond given boundaries, users obtain benefit.
Spread
this case, users should specify an exact number of how the price will rise or drop. For instance, it will be increased by ten points in eleven hours.
Special features of binary options
There are five characteristics, allowing to describe all the advantages of binary options:
- possibility to manage risks: traders always know how much one can win/loose on one option prior to the conclusion of an agreement;
- availability: buying a contract, traders can obtain revenue from their own forecast for price movement;
- good income level: users can receive lots of revenue in comparison with the sum as of the time of purchasing assets;
- usability: binary option operations are not difficult, as the volume of pay-offs directly depends on asset price movement.
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