Other Types of Binary Options
The example
above is for a typical high-low binary option - the most common type of binary
option - outside the U.S. International brokers will typically offer several
other types of binaries as well. These include "one touch" binary
options, where the price only needs to touch a specified target level once
before expiry for the trader to make money. There is a target above and below
the current price, so traders can pick which target they believe will be hit
before expiry.
A
"range" binary option allows traders to select a price range the
asset will trade within until expiry. If the price stays within the range
selected, a payout is received. If the price moves out of the specified range,
then the investment is lost.
As
competition in the binary options space ramps up, brokers are offering more and
more binary option products. While the structure of the product may change,
risk and reward is always known at the trade's outset.
Binary
option innovation has led to options that offer 50% to 500% fixed payouts. This
allows traders to potentially make more on a trade than they lose - a better
reward:risk ratio - though if an option is offering a 500% payout, it is likely
structured in such a way that the probability of winning that payout is quite
low.
Some
foreign brokers allow traders to exit trades before the binary option expires,
but most do not. Exiting a trade before expiry typically results in a lower
payout (specified by broker) or small loss, but the trader won't lose his or
her entire investment.
Read more:
What You Need to Know About Binary Options | Investopedia
http://www.investopedia.com/articles/optioninvestor/10/binary-options.asp#ixzz3xaZaZkue
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Read more:
What You Need to Know About Binary Options | Investopedia
http://www.investopedia.com/articles/optioninvestor/10/binary-options.asp#ixzz3xaZ8gHR8
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