The Attraction of Binary Options
If you are able to understand the easy concept of binary options, there are high returns waiting to come your way and that too within a very short period. Further, it also requires very little capital and hence the risk is not as high as one finds it in other investment avenues. This perhaps is the main reason for the growing popularity of binary options and is something no trader should miss out on. Let us over the next few lines try and understand why they are so attractive:
Binary options are called that way because they have two outcomes. It involves trying the estimate how much an asset will climb or climb down over a period of time. If you are correct in assessing the growth up or growth down, you make money or you lose. It is as simple as that.
Binary Options Benefits
- There are many reasons that could be ascribed to the growing popularity of binary options. The most attractive reason is that it is open to almost everyone. Prior to 2008 to make money through this route you needed a broker to be on your side. However, as the Securities and Exchange Commission has amended the rules, things have become much easier and anyone can trade binary options.
- The range of assets that are available are quite wide. This in effect means that you can trade on anything that has a variable price. You can trade on foreign exchange, market indices, individual stocks, and also commodities. You have the freedom to trade on something that you know without being restricted only to a particular item. [wp_ad_camp_1]
- The trading is also quite simple. All you have to do is to choose an asset that you wish to trade on and place a call option if you feel that the price of that particular commodity will go up over a period of time of your choice. On the other hand if you feel that the price of the commodity will fall you can choose a put option. Once you have decided on which binary option you want to choose you can make the investment. It is so simple and nothing beyond this.
- The returns through binary options are quite fast and also high. There are many who have earned anything between 65 to 81% profits on the amounts invested. It is all about correct prediction. You need not have to wait till eternity for the actual result and all you need is to find out ways and means by which you can make a series of successful trades which will pump in money to your account. As mentioned above the investment involved is also quite low and hence the risk is lower to that extent.
Let us look at a trading example:
Read also: 4 Binary Options Strategies that Works!
- If you purchase a call option on a share that is currently trading at $50 and you purchase a total of $100 for that option. Suppose you buy it for a period of two hours with a payout of 75% you could have the following two scenarios. If the price goes up to $51 you win and receive $175 ($100 plus $75). On the other hand if the share falls to $49 you end up losing your $100 and earn nothing.
- Alternately if you have opted for a Put option, if the share price goes up to $51, you lose everything but if it goes down to $49 you end up making $175.
Though there is money to be made from binary options, it is important to start with a low investment till such time you have mastered the basics of the trade. It can be right for you provided you can move forward with a step by step approach.