While good brokers are a necessity in any trading, they are especially important for a derivative asset like binary options. Read on to learn more about the best binary options brokers.
Learn more about Binary options … click here!
A binary option is one of the simplest financial instruments. Technically, it is a derivative — when you buy it you are not buying (or selling) an underlying asset but speculating on its movement.
There are 3 variables that define a binary option:
1. Asset: What are you speculating on? This can be anything from a currency, commodity, individual stock or even one of the stock indices.
2. Duration: How long is the expiry time? Depending on the options available it can be anything from one minute to one week or longer.
3. Direction: What direction are you betting on? Is the asset going to rise or fall?
While the value of traditional options fluctuates based on the distance to the strike price, this is not the case with binary options. Here the outcome is binary, either a win or a loss;hence the name.
Binary options have variable payouts. They are based on volatility, liquidity and other factors. Although they are sometimes as low as 50%, they are usually between 80% and 100%. Breakeven results on binary options usually need a 56% win rate with excellent results around 65% or higher.
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