Introduction to Binary Options Trading - 1 views
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tech writer on 26 Dec 12Although they have been available in other markets for some years, the United States has now just caught up and introduced binary options trading to the traders' portfolio of financial tools. Binary options, or fixed return options as they are known on the American Stock Exchange, have been available in America since the middle of 2008, and are simple to understand. The binary option is in essence nothing more than a bet on which way the price of a stock, an index, or a foreign currency will move. You can choose up or down and place your bet. When the option date and time is reached, you will see if you were right or wrong. If you were wrong you still get 5% at www.eztrader.com, and if you were right you win a fixed amount, perhaps $100 or $1000 depending on the contract and the initial investment. If you are familiar with conventional options trading, you can see that binary option trading is much easier to understand and more straightforward. Unlike regular options, the exact price at expiration doesn't matter - either you are "in the money" in which case you get a set amount, or "out of the money" which means you lose your stake. You know from the moment you place your contract how much you can gain. Binary options are available on the Chicago Board of Trade and AMEX, and there are several online brokers available such as www.eztrader.com. Many traders have started using binary options to hedge their conventional positions in a trade. Taking a binary option for a fall in the price on a commodity that is owned means that even if the price does fall, the trader doesn't have to be out of pocket.