That is the way – Binary Options

Already in the summer of 2008, binary options on the CBOE were launched. The CBOE is the trading of warrants and other derivatives, the world’s oldest stock exchange. Could be traded binary options originally from institutional investors and major investment banks.

In the meantime and for private operators have one. Binary options or digital options are associated with the binary system, consisting of two digits. On that, the entire digital world is based. Computer programs, as you know has only the two values and these are 0 and 1. A sequence of the options is equal to the normal trade in the binary options trading. A participant in the market buys a call option or put option in the binary options trading, and this is like the normal options trading.

When the put option of the underlying asset, a price decline is expected and the call option is set in the respective underlying security to the price increase. The price of the underlying security will then decide on the profit or loss and this with the expiry time of the option purchased. The dealer may already after only one hour a profit if they are correct.

The basic concept

The popularity in the market for binary options is enjoying an increase. This can be explained easily, because it is based on relatively few principles and works quite simple. In three easy points, the basic concept are described. The dealer put the beginning of each transaction you want to trade what they underlying.

You can choose between currency pairs, commodities, indices and equities. Then, the dealer must agree to a contract term, as this is common in binary options. This contract period is from one hour to one month. In the end, the dealer then select those binary options, for which the price movements of the underlying security meets the expectations. This is s is the put option or the call option.

The three main components of the digital options are forecast, contract and bond of the price change.In the digital option as it comes with the classic option so to acquire a certain price within a certain underlying instrument at a certain time, and not the acquisition of real bonds. If the binary option purchased by a trader, he speculates with the direction of price movements and not the absolute price of the bond.

Currently there is a choice of four categories underlying, where the traders with digital options can take action. These four are currency pairs, commodities, stock indices and stocks.