Binary options are a simpler, quicker way to earn profit speculating on the financial markets than trading through a stock broker, spread betting, or contracts for difference.
Like all options, binary options are always based on an underlying instrument or asset which you choose, from currencies, stocks, commodities, or indices. Once you pick an asset to trade, you decide whether you think the asset’s market price will move higher or lower than its current price by the expiry time you select, from one minute away up to one hour away.
Binary options can have one of two outcomes. You answer a simple “Yes or No” question, such as will the USD/EUR finish above the current price at the end of the hour? If Yes your trade wins and is “in the money”. If No your trade loses and is “out of the money”. If you predict correctly, you earn the profit plus you get your trade stakes returned. If you predict incorrectly, you lose the trade stakes and nothing more.
You can trade from as little as $1 / £1 / €1 / C$1 / A$1 up to $1000 / £1000 / €1000 / C$1000 / A$1000 per trade with no charges or commissions. You can operate an account with as little as $10 / £10 / €10 / C$10 / A$10 . Unlike contracts for difference (CFDs) or spread betting, binary options do not involve margins or require stop loss orders. You know exactly how much you stand to gain or lose when placing the trade. Binary options are fixed return options (FROs) for a pre-determined, fixed amount. Binary options are therefore perfect for traders who want the potential for substantial, short term gains with strictly limited risk.