Binary options are a popular financial instrument that allows traders to speculate on the price movement of underlying assets. They are called “binary” because they have only two possible outcomes: either the trader wins a fixed amount of money or loses their entire investment. In this article, we will discuss the different types of binary options and how they work.
One Touch Options
These are binary options that pay out a fixed amount of money if the price of an underlying asset reaches or surpasses a predetermined level at any time during the life of the option. If the price of the underlying asset does not reach the predetermined level during the binary options trading, the trader loses their entire investment. They are popular among traders who believe that an underlying asset will experience a significant price movement in a certain direction.
High/Low Options
High/Low options, also known as Call/Put and put options, are the most popular type of binary option. In this type of trade, the trader has to predict whether the price of an underlying asset will be higher or lower than a certain price level at the time of expiration. If the trader’s prediction is correct, they receive a fixed payout, usually ranging from 70% to 90% of the initial investment. If a trader’s predictions are incorrect, their entire investment is at risk.
No Touch Options
They are the opposite of High/Low options and allow traders to profit from a price that does not reach or breach a certain level. This type of option is based on whether the underlying asset price remains within or outside a predetermined range by the expiration time. The trader will receive a predetermined payout if the asset price remains within the given range. If the asset does not remain within that range, then there is no payout, and the trader will lose the initial investment.
Range Options
These are also known as “boundary options” and are distinguished by the fact that they pay out a fixed amount of money if the price of the underlying asset stays within a predetermined range at the time of expiration. If the price of the underlying asset moves outside the predetermined range, the trader loses their entire investment. Range options are popular among traders who believe that an underlying asset will experience a period of consolidation, with the price staying within a certain range.
60 Second Options
These are also known as “Turbo Options” and are binary options with a very short expiration time of 60 seconds. In this type of trading, the trader has to predict whether the price of an underlying asset will be higher or lower than the current level after 60 seconds.
If the trader’s forecast proves to be accurate, they will receive a predetermined remuneration, often ranging from 70-90% of their initial investment. If the trader’s prediction proves inaccurate, they will forfeit their entire investment. 60 Second options are popular among traders who prefer fast-paced trading with quick profits.
Pairs Options
These allow traders to speculate on the performance of one asset relative to another. The trader has to predict which asset will perform better over a predetermined period of time. If a trader’s prognosis proves to be accurate, they will receive an agreed-upon payout that generally ranges from 70% to 90% of the original investment. If the trader’s prediction is incorrect, they lose their entire investment.
Ladder Options
These options’ pay out a fixed amount of money if the price of the underlying asset reaches certain predetermined levels at specified intervals during the life of the option. The trader has to predict whether the price of the underlying asset will reach these predetermined levels. If the trader’s prediction is correct, they receive a fixed payout for each predetermined level that is reached. In the event that a trader’s forecast proves to be inaccurate, they risk their entire capital.
Final Say
Binary offers a variety of trading opportunities for traders who are looking to profit from price movements in the financial markets. It is also important for traders to understand the risks associated with binary trading and to use risk management strategies to protect their investments. By understanding the different types of them, traders can increase their chances of success and maximize their profits.
