New trend in Forex trading: Binary Options

Binary options are also called all-or-nothing options, digital options, or fixed return options (FROs). A binary option is a trading instrument with a fixed return, and has just two possible outcomes. The result of a binary option can be either a fixed amount of money or asset (if is successful), or nothing at all (if is unsuccessful). Accordingly, there are two types of binary options: cash-or-nothing and asset-or-nothing.

In the case of a cash-or-nothing binary option, the payout is a fixed amount of money or, in case of losing there will be no payout. On the other hand, in case of an asset-or-nothing option, in case of winning the value of the underlying security will be paid. Binary options do not have a certain price, the trader being the one that decides the amount of money to put at risk. The binary options can expire at different time intervals that can range from 5 minutes, one hour, one day up to one month.

If the option is based on the presumption that the asset price, at the expiry time, will be higher than it was at the time of purchase, is called a call option and if the asset price should be lower than it was at the time of purchase, is called put option.

The most used binary options are the ones cash-or-nothing. The procedure is very simple: for example a trader thinks that the price of oil, now at $75, will rise up to $78 in one day. In this case the payout for the call option will be 180%, and the trader decides to invest $400 in the option. If the option expires in-the-money (the oil price is higher than $75), the trader will receive $720. On the other hand, if the option expires out-of-the-money (the oil price is lower than $75 at the time of expiration), the trader loses his money.

At most binary options brokers, in case of out-of-the-money expiration, the trader will lose a large part of the amount invested, but not all. For example he could lose 90% of the investment made on binary options, the rest of money returning into his account. If you are interested to trade using binary options, Anyoption, Eztrader, Binarix and Startoptions are the most reliable binary options brokers available on the internet.