A binary option is a fixed return option since only 2 outcomes are possible, both of which are known at the onset of the contract – hence all risks can be fully taken into account.
A binary option is a contract which gives the buyer (known as the owner) the right, but not the obligation, to buy or sell an underlying asset at a fixed price within a specified time frame.
The underlying assets being traded could be currency pairs (e.g. USD/GBP), commodities (e.g. Silver, Copper), stocks (e.g. Apple, Vodaphone) or indices (e.g. Dow Jones, Nasdaq). The strike price is the industry name for the fixed price at which the asset is bought.
When trading binary options, the buyer must decide whether he thinks the chosen underlying asset will hit the strike price by the selected expiry time. The expiry time can be at the end of the nearest hour, or the end of the day, end of the week or end of the month.
There are 3 aspects involved in placing a binary option trade: selection of the asset, selection of the expiry time/date and selection of the direction the asset will move in.
If the buyer believes that at this chosen expiry time, his binary option trade will be higher than its current price, then he purchases a call option. If the buyer believes that at this chosen expiry time, his binary option trade will be lower than its current price, then he purchases a put option.
The returns from binary option trades are known once the contract is made. If an option expires in-the-money then a buyer will receive between 65-71% profit on the investment amount. If an option expires out-of-the-money then with anyoption™, the buyer will receive a 15% payback on his initial investment. The controlled risks with binary option trading makes it a preferred method of trading for many investors because the potential gain or loss is known from the offset, so all possible situations can be planned and accounted for.
With the development of the internet, binary option trading has expanded to online platforms. This means that a buyer can purchase binary options from the comfort of his own home, without the need for a broker. Using the anyoption™ platform, a buyer can follow the market trend of an asset and see all his past and current investments in a clear fashion.
In this respect, trading binary options online is extremely flexible. The asset, expiry time and predicted asset direction can be controlled by the owner of the investment who can tailor make the option to suit his needs and knowledge. The only unknown factor is whether the asset will expire above or below its strike price.
Thursday, August 27, 2009
Forex Options Trading
Forex (fx) is an acronym of Foreign Exchange. Forex Trading is when currencies from different countries are traded against each other.
In traditional forex trading (or currency trading) actual currencies are bought and sold. However, in forex options trading, the buyer purchases the option not the currency i.e. they are entering into a contract to buy currencies at a fixed price within a pre-determined time frame.
A forex option is a type of binary option which means both outcomes are realized when the contract is created. If the potential gain and the potential loss from the trade are known from the onset, then it makes the trade totally transparent.
In a binary option trade there are only two possible outcomes: or the option expires in-the-money and the buyer receives a fixed amount of cash; or the option expires out-of-the-money and the buyer receives nothing. However, if forex option trading is carried out on the anyoption™ platform, an option expires out-of-the-money, then a buyer receives a 15% back of his initial online investment.
In forex option trading the underlying asset being traded is a currency pair e.g. EUR/GBP, AUD/USD, USD/JPY, GBP/JPY plus many more.
When placing an online investment, the result is independent of the magnitude by which the price change of the currencies relative to one another. For example, a buyer may purchase a call option for ?100 on USD/JPY currently at 97.1563, with an expiry time of the end of the week, for a return of 70%.
If at the end of the week, the currency pair ends at 97.1564 then the option has expired in-the-money and the owner will receive ?170. Even though the stock has only moved 0.001 points, they will still receive the full 70% payout. This makes forex option trading an attractive method of trading for many new investors.
Once an exclusive industry, forex option trading is now available to everyone. Since all risks are known from the onset and due to the comfort of online trading, many buyers are turning to online investments, specifically option trading, to purchase their trades.
In traditional forex trading (or currency trading) actual currencies are bought and sold. However, in forex options trading, the buyer purchases the option not the currency i.e. they are entering into a contract to buy currencies at a fixed price within a pre-determined time frame.
A forex option is a type of binary option which means both outcomes are realized when the contract is created. If the potential gain and the potential loss from the trade are known from the onset, then it makes the trade totally transparent.
In a binary option trade there are only two possible outcomes: or the option expires in-the-money and the buyer receives a fixed amount of cash; or the option expires out-of-the-money and the buyer receives nothing. However, if forex option trading is carried out on the anyoption™ platform, an option expires out-of-the-money, then a buyer receives a 15% back of his initial online investment.
In forex option trading the underlying asset being traded is a currency pair e.g. EUR/GBP, AUD/USD, USD/JPY, GBP/JPY plus many more.
When placing an online investment, the result is independent of the magnitude by which the price change of the currencies relative to one another. For example, a buyer may purchase a call option for ?100 on USD/JPY currently at 97.1563, with an expiry time of the end of the week, for a return of 70%.
If at the end of the week, the currency pair ends at 97.1564 then the option has expired in-the-money and the owner will receive ?170. Even though the stock has only moved 0.001 points, they will still receive the full 70% payout. This makes forex option trading an attractive method of trading for many new investors.
Once an exclusive industry, forex option trading is now available to everyone. Since all risks are known from the onset and due to the comfort of online trading, many buyers are turning to online investments, specifically option trading, to purchase their trades.
Stock Options Trading
Stock represents what a company is worth were they to sell off everything they own i.e. stock is their assets and their profits. It also helps determine a company’s value in the market place.
A stock option is when a buyer purchases either a call or a put option in the stock of a selected company. For example, Buyer A may believe that the performance of Company B is improving and may therefore decide to purchase a call option in the stocks of Company B. If the option expires above its strike price i.e. if the price of Company B’s stocks have risen, then Buyer A will profit from buying the option at its earlier lower price.
There are different types of options available, stock options being just one of them. Buyers may also trade commodity options, index options and currency (or forex) options. See anyoption™ for a list of stocks available for online investment.
Since a stock option is a type of binary option, there are 2 possible outcomes possible, all which are known at the onset of the contract.
The possible outcomes are: the option expires in-the-money and the buyer receives their investment amount back plus the return rate (with anyoption™ it’s between 61%-71%); or the option expires out-of-the-money and the owner receives nothing (however, on the anyoption™ platform, an owner receives 15% back if his option expires out-of-the-money). If the option expires at exactly the same level as the strike price and the investment is paid back in full to the buyer.
A main advantage of stock option trading online versus traditional stock trading, is that with a stock option, the payout is independent of the magnitude by which the price of the stock moves. For example, a buyer may purchase a call option for ?100, expiring at the end of the hour, for a return of 70% on the stock of Company B, currently at 165.896 points.
If at the end of the day, the stock ends at 165.897 then the option has expired in-the-money and the owner will receive ?170. He will receive the full 70% payout, even though the stock only moved 0.001 points. This demonstrates the simplicity of trading stock options.
A stock option is when a buyer purchases either a call or a put option in the stock of a selected company. For example, Buyer A may believe that the performance of Company B is improving and may therefore decide to purchase a call option in the stocks of Company B. If the option expires above its strike price i.e. if the price of Company B’s stocks have risen, then Buyer A will profit from buying the option at its earlier lower price.
There are different types of options available, stock options being just one of them. Buyers may also trade commodity options, index options and currency (or forex) options. See anyoption™ for a list of stocks available for online investment.
Since a stock option is a type of binary option, there are 2 possible outcomes possible, all which are known at the onset of the contract.
The possible outcomes are: the option expires in-the-money and the buyer receives their investment amount back plus the return rate (with anyoption™ it’s between 61%-71%); or the option expires out-of-the-money and the owner receives nothing (however, on the anyoption™ platform, an owner receives 15% back if his option expires out-of-the-money). If the option expires at exactly the same level as the strike price and the investment is paid back in full to the buyer.
A main advantage of stock option trading online versus traditional stock trading, is that with a stock option, the payout is independent of the magnitude by which the price of the stock moves. For example, a buyer may purchase a call option for ?100, expiring at the end of the hour, for a return of 70% on the stock of Company B, currently at 165.896 points.
If at the end of the day, the stock ends at 165.897 then the option has expired in-the-money and the owner will receive ?170. He will receive the full 70% payout, even though the stock only moved 0.001 points. This demonstrates the simplicity of trading stock options.
Options Trading Platform
Options Trading Platform
The continuous growth of the internet has placed option trading on a whole new level. Gone is the need for brokers, geographical restrictions and in-depth knowledge of financial markets. The creation of online option trading platforms has taken binary option trading to a whole new level.
Online trading platforms such as anyoption™, enables traders to control and customize their own option trades. Firstly, they select which asset they would like to buy, be it an index, commodity, currency pair or stock - there are over 50 to choose from. Then the expiry date is selected. Does the buyer want the option to expire at the end of the hour? Or at the end of the day, week or month?
Next, the buyer chooses the direction in which he thinks the asset will move. If he thinks up, then he selects a call option. If he thinks down, then he selects a put option. Finally, he decides on the amount of the contract. This can anything between $100 and $3,000 (or the equivalent) for a single online investment.
Online option trading suits the life of the modern day person. He is not bound by time or geography and he need not be an expert to profit. Some knowledge of the asset being traded in is advisable but anyone can try their hand at online investments.
Advantages of anyoption™’s online option trading platform is that it’s 100% web based, it does not require software download and it’s simple to use. anyoption™’s pricing and execution modules set a new standard in the online trading market: the interface is self explanatory and easy to use, there is an incomparable number of products which options are offered on and the speed and accuracy of settlements is flawless. anyoption™ uses the most advanced and stable technologies to assure an investor’s safety and satisfaction in all online option trades.
Additionally, when investing online, a buyer can benefit from the automated features displayed on anyoption™, to learn about the recent performance of an asset. The site tracks the performance of each asset, aiding the buyer with his investment.
Online option trading is changing the face and scope of the trading world. Now worth trillions of dollars, the flexibility of option trading over traditional trading, coupled with the ease of access of online trading, makes this a vibrant market to be involved in.
Online Options Trading at anyoption™
Online Options Trading
Online Options Trading at anyoption™
anyoption™ is a new binary option trading platform available for private and institutional investors worldwide. Our option trading platform is 100% web based, and does not require software download or any other previous trading experience. anyoption™ pricing and execution modules set up a new standard in the online trading market: the interface is self explanatory and easy to use, the range of products we offer options on is incomparable and the speed and accuracy of settlements is flawless. We use the most advanced and stable technologies to assure your safety and satisfaction.
Binary options – also known as digital options or fixed return options – are becoming more and more popular in recent years and are in considerable demand especially in times of markets uncertainty. The advantages are clear – return is known in advance, no liquidity or execution issues, wide range of expiry points and a unique feature of anyoption™: 15% of the principal investment is paid back even if your option expired out of the money.
Our proprietary algorithms allow us to trade with you at any time, as long as the base asset is being traded in the relevant market and we receive accurate data streams from our data provider – Reuters. It is strongly advised to read carefully our terms and conditions and that you become fully aware of the difference between the level we offer options at and the real time market price, according to which our options expire.
We manage our liabilities and exposures carefully and we guarantee payouts of your profits according to our terms. Customers deposits are held in a separate trust account and are not being used for any purpose other than purchasing options via our website by the customers.
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