The act of engaging in trade of the security or asset is called trading options or option trading. An option is a contract or agreement between two parties to buy or sell an asset at a fixed price and fixed time in future. It is called an option because the buyer/investor is not obligated to carry out the transaction. At present, trading options has become a very popular form of trade in the financial market. However, it is not a get-rich-quickly scheme where you can make a handsome amount of money instantaneously. Only if you know the basics and are ready to take a risk, can you gain huge profits by trading options over time. Go to Nachgefragt.net and get started chasing your future!
Binary option is a type of option in which there are only two possible outcomes i.e., where the payoff is either some prefixed amount of money or asset or nothing at all. Accordingly, binary options can be of two types- cash-or-nothing binary option in which the investor gains a fixed amount of cash if the option expires in-the-money and the asset-or-nothing binary option which pays the underlying value of the security under similar circumstances. Binary options trading is an easy way of getting involved in the financial market by making short-term investments with low monetary value that yields high profits. There are many benefits to trading binary options when compared to more traditional options trading. These are as follows.
- Small Capital and High Return- Unlike other conventional stocks and options, binary options generally require a small investment and can yield up to 75% – 81% of the initial capital.
- Short Term Investment – While traditional options take many years to mature, the majority of binary options expire within a week, a day, one hour or even less than an hour. This means that an investor can make a huge profit in a very short time from a single contract.
- Calculated Risk and Reward- One of the biggest pros of binary options trading is that the return on initial investment is predetermined. From initiation of the contract, the amount of potential profit or loss is known. So you can choose to minimize the risk factor and maximize your gain.
- Advantage in Volatile Markets- Trading binary options has an immense advantage in volatile markets, as it offers a more or less safe way to keep on investing. While in traditional investments huge losses can be incurred by volatility of the markets, the fixed rates of binary options enable you to trade binary options in a highly profitable way under the same circumstances.
Thus, binary option has decreased the exposure to risk while increasing the probability of earning huge profits. It may be concluded that it is not difficult to trade binary options if you have a sound knowledge of all the parameters of the trade and can plan your strategies accurately. But all things said and done, any kind of financial investment carries risks and one should evaluate the markets carefully and do his homework thoroughly before investing in financial markets.