What is Binary Options?
According to Wikipedia, Binary option is a type of option where the payoff is either some fixed amount of some asset or nothing at all.
There are two main types of binary options:
* Cash-or-nothing binary option: Pays some fixed amount of cash if the option expires in-the-money.
* Asset-or-nothing binary option: Pays the value of the underlying security if the option expires in-the-money.
Hence, the options are “binary” in nature, because there are only two possible outcomes.
They are also called all-or-nothing options, digital options (more common in forex / interest rate markets), and Fixed Return Options / FROs (on the American Stock Exchange).
A trader speculates on a binary cash-or-nothing Call Option on Company ABC that its stock price will be at $50 at the expiry date with the investment amount of $100.
If at the future expiry date, the stock is trading at or above $50, the trader will receive $100, in addition to $100 invested.
If the stock is trading below $50, nothing is received. That means he lost all the $100 invested.
One broker that provides Binary Options Trading is StartOptions.
StartOptions offers a FREE Demo Account that will allow newbie’s traders to become familiar with their product and user-friendly platform, as well as testing and improving trading strategies. The demo account operates exactly the same as a real account, enabling you to have the full binary options trading experience without risking real money.
StartOptions’s "Above Below" game lets you trade real-time binary options across various financial instruments; from US stocks and Indices to commodities and Forex Pairs.
On a virtual account you can buy CALL (Above), or buy PUT (Below) and trade the same way you would in the real account. You will also have access to your trading history, as well as all the tools and features of the trading platform.
Every new player begins his trading journey with a virtual wallet of $500 to speculate with and to show the world his trading skills.
What is the payout for the options traded in "Above Below" game?
StartOptions's "Above Below" game offers up to a 75% payout for successful trades (options that expired In-the-money), and a 10% return for unsuccessful trades (options that expired Out-of-the-money).
You can take trading positions for as little as $30.
You can speculate $100 that the price of Google stocks will be higher than the current stocks in one hour from now. If correct, you will receive 72% payout on your initial investment i.e. your account will be credited with $72 in addition to your $100 investment.
On the other hand, if by the end of the hour Google's stock is lower, you'll keep 10% of your investment, i.e. your account will be credited with $10. That means you lose $60 in this case.
What is a Call Option in "Above Below" game?
An option that yields a profit when the option closes higher than the level it was purchased at. If it closes at exactly the same price, the original investment amount will be returned to the player.
What is a Put Option in "Above Below" game?
An option that yields a profit when the option closes lower than the level it was purchased at. If it closes at exactly at the same price, the original investment amount will be returned to the player.
What is 'In-The-Money' expiry in "Above Below" game?
A professional term to describe a successful option trade in "Above Below" game, i.e. a CALL option that expired above the option price during purchase, or a PUT option that expired below the option price during purchase.
What is 'Out-of-the-money' expiry in "Above Below" game?
A professional term to describe a failed option trade in "Above Below" game, i.e. a CALL option that expired below that expired above the option price during purchase, or a PUT option that expired above, or at the same option price during purchase.
What kinds of instruments are traded on StartOptions?
Apple (Symbol: AAPL), Cicso (Symbol: CSCO), Citybank (Symbol: C), Google (Symbol: GOOG), Microsoft (Symbol: MSFT), Yahoo! (Symbol: YHOO).
Forex Currency Pairs:
EUR/USD, GBP/USD, USD/CHF, USD/JPY, USD/CAD, GBP/JPY.
Gold, Platinum, Silver.
How to start trading the markets?
You can register via this link, then click “Register”.
After the registration procedure you will receive a confirmation e-mail to the e-mail address you entered during registration, after confirming the e-mail log in to: StartOptions.com and start trading.
When you’re ready for trading of binary options using real money, you can open an account with them.
The initial minimum deposit amount is either USD100, EUR100 or GBP100.
Deposits can be made with Visa, MasterCard and Diners cards. Also by wire transfer, moneybookers and several debit cards.
The 10 Free Trading Lessons will cover the following topics:
(1) The importance of psychology in price movement.
(2) How to spot mega trends.
(3) Understanding of technical price objectives.
(4) How to picture price objectives.
(5) How to trade with moving averages.
(6) How to use point and figure trading techniques.
(7) How to use the RSI indicator.
(8) How to correctly use stochastics in your trading.
(9) How to use the ADX indicator to capture trends.
(10) How to capitalize on natural market cycles.
On top of the above, you will learn all about Fibonacci retracements, MACD, Bollinger Bands, and much more.
These 10 free trading lessons will be sent via email.
In order to get this, just fill out the form here. Then you should be able to get it started right away. Hope this info can be useful to you.
Friday, May 7, 2010
What is Binary Options?