Binary Options offer a new approach in the trading business. Here the investor can contemplate the asset direction and measure their move in the forex market. When a binary option is purchased, the investor is offered a contract (created automatically), with the help of which he can buy an underlying asset at a fixed price, at a fixed duration from the seller.
The other terms attributed to binary options are-
- ‘All or nothing Options’ as the payoff received while dealing with binary options can be all or nothing.
- Fixed Return Options (FROs) – as the return is fixed.
- Digital Options
Ideally, traders need to contemplate the direction at which the underlying asset is moving (whether it is going up or down) without taking other factors into account.
Binary Options and One-Hour Options
One-Hour Options are considered mass market financial options as it accredits the trader with a flexible trading pattern without him getting involved in further complexities.
Depending upon the yield attributed to the pattern chosen, binary options help in hedging the risks and thus confirm high returns within a short span of time.
Let us look at other instruments where the Hourly Options are available. These are Stocks, commodities, and indices.
In terms of the returns pertaining to binary options, doesn’t matter if the trader has made a call or put, once the contract is approaching its expiration and the market moves as anticipated by the trader, the contract will expire in the money. On the other hand, if the market moves in the opposite direction as anticipated by the trader, the contract will expire out of the money.
Besides the two circumstances mentioned above, when the expiry level is equal to the strike price, the contract will expire at the money.
Binary expressions are mathematical expression where there can be only two outcomes- 0 or 1. Similarly, binary options in trading have two possible outcomes, either structured reward or risk.