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what are binary options

What are binary options

Binary options (also called fixed return options) are a relatively new type of investment that is easy to trade. Until recently binary options trading was available only for banks and prominent financial institutions but in 2008 it became accessible to the public. High returns and simplicity of binary options trading make this type of trading attractive for everyone, be it a newbie or an experienced trader. The main idea that you should grasp as a binary options trader is that you don’t buy or sell an underlying asset itself but predict its way of movement before the time of expiry. That’s why there are only 2 outcomes: if your prediction turns out to be correct, you win (this variant is called “in-the-money”); if your prediction turns out to be incorrect, you lose (this variant is called “out-of-the-money”). Return on the invested sum is predetermined and can be between 70% and 85%. Rarely an asset’s price at the moment of expiry is the same as your strike price, meaning it’s a tie. This variant is called “at-the-money” and in this case you get the invested sum back, meaning you don’t get any profit or suffer any loss. As a binary options trader, you can choose from a diverse range of assets (indices, commodities, stocks, currencies) and expiry times (from 30 seconds to 1 month). Open an account with Light Options and start making money on binary options!

There can only be two outcomes to a binary options trade. A trader either receives a predetermined return if his prediction of price movement is correct at the time of the contract expiry. This outcome is called “in-the-money”. Or, if a reader’s prediction is incorrect at the time of the contract expiry, which is called “out-of-the-money”, a trader loses his investment.

In rare cases, there is also an “at-the-money” scenario that means an option’s strike price is identical to the price of the underlying asset at the time of the contract expiry. In this situation the investment is returned without profit or loss.

The predetermined return on a binary options contract can be anything from 75-85% and a trader can choose from a variety of assets, such as stocks, currencies, commodities and Indices.

The expiry time of a contract can be anywhere between 30 seconds and one month.

One of the greatest advantages of binary options trading is that both the return and the expiry time are known in advance that makes decision making process relatively simple.

Transactions occur through a secure online connection, and traders can get started right after opening an account and depositing funds.