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Types of Binary Options Explained - Option Banque

Options

Financial “Options” as the word indicates are a financial instrument that, offers its holder a discretionary and non-binding right to conduct a financial transaction.

Included within this right (without any obligation) is a safeguard which allows the buyer of this right to protect themselves from an unbearably large financial liability, by choosing to give up the right provided within the option, unused, thereby losing the price paid to acquire this right. Therefore, the price paid for the right is the maximum liability its buyer is exposed to.

This liability is known for certain when the transaction is conducted.

There are many types of options, with their distinct features.

Option Banque currently provides its clients access to binary options, which are the simplest and most user friendly options available today, offering investors a fixed risk, fixed return investment mechanism that allows them to participate in financial markets in a safe, simple and affordable manner.

Types of Binary Options

Binary options trading is one of the newest and simplest ways of investing capital to generate attractive returns. With ability to trade online, Option Banque allows you to trade in a comfortable and convenient manner, at a time and a place of your choice.

There are no restrictions on the expertise and experience of who can trade binary options. They are quite simple to understand and trade, compared to traditional forms of investment or trading.

That however, requires investors and traders to be fully aware of the details of how binary options operate, and the unique tools offered by Option Banque, that help reduce the level of risk and increase the potential profits.

Option Banque provides you with the widest range of options available in the industry. As investors/traders in binary options, clients and prospects need to be aware of different types of binary options available for trading. The different types of options that are available may seem to be confusing to some initially, but with a little patience and time, they become very intuitive to understand and invest in.

1.“Up/down” “Digital” or “Binary” option

This is one of the most common and probably the simplesttypeof binary option contract. It usually allows the trader to take along or short position depending on a given asset.

This method is also called as digital option or even up/down option.

All that an investor/trader needs to do here is to estimate whether the price of the given asset will end up at a price higher or lower than the current price of the asset, at a designated time, called the expiry of the option. Therefore the trader/investor only has to make a judgement on the future direction (up or down) of the price of the asset and not its precise level, that is expected at the time of expiry, as compared to its current price level.

2.60 second “Turbo” option

This high speed, high frequency method of trading and investing, is becoming quite popular currently.

Here the options expire in 60 seconds. The main advantage of this type of trading is if the value of an asset is moving ahead in one constant direction, the trader can take advantage of this by conducting a number of trades within a short time frame, thereby enhancing profitability from any given price move. This method allows the traders to respond quickly to the sudden variation in the market. In certain aspects, this option is similar to a regular digital option. Its primary distinction is the shorter expiry. It is used by investors and traders to make rapid profits, in short, small parts, rather than one large transaction.

3.Boundary options

Boundary options on a given asset, allow an investor/trader to estimate and determine whether the prices of the asset will lie in between two boundary prices (upper and lower limits of the boundary which are pre specified), or outside them at the time of expiry.

When you consider the market to move out of the price range of the asset, as has been specified, you invest in the “outside” option. In case you determine that the market prices shall remain within the specified range, you may invest in the “inside” option. These options are primarily meant to trade on the rise or fall in volatility in any given market.

4.One touch

This option is quite unique.

They are also known as one touch options in the industry and are a little more advanced in their rationale compared to the other traditional binary options.

In this case, you need to pay attention to the fluctuations of the price of a given asset.
If you determine that the price of an asset is headed higher, from the current price, then you need to consider a “Touch Up/Call” option. If you determine it to be moving lower than you would consider a “Touch Down/Put” option.

Next, before you buy the “Touch Up/Call”option, you also need to determine if you calculate that the price of the asset shall touch or cross the pre-defined price level specified in the “Touch Up/Call” option. If your calculations lead you to believe that both these events shall happen before the expiry of the option, you buy the Call/Touch Up Option.

Similarly, if your judgement leads you to calculate the price of the asset is headed lower, and both conditions as described above (that the price is headed lower and is expected to go up to or beyond the pre specified level) shall be satisfied, then you would purchase a put option on the asset.

One Touch/Touch/Touch Up/Touch Down options are becoming very popular as traders and investors become familiar with them. They are in huge demand in volatile markets as the return on investment is much higher on these options compared to some of the other options. The higher returns are an incentive, and compensation to learn more about these options and to utilize them in a systematic manner. These options are also a good way to take advantage of the volatility or expected volatility in a given market.

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