Define a Binary Option?
The definition of a binary option is an option where the payoff is either some fixed amount of some asset or nothing at all. The two main types of binary options are the cash-or-nothing and the asset-or-nothing binary option... You are in the money, at the money or out of the money
You simply select if the asset is going to go up or down and the expiry time that you think the asset would have reached this goal.
Binary options are a simple and effective tool to investing and trading in the financial markets. They are especially appealing for traders looking for a quick return and have the skill to project the price of an asset going up or down. They offer high returns along with a very small initial investment.
What can an online Option Site help me do?
An online Option site is a powerful way to build your wealth and income. It offers convenience, easy portfolio tracking, and easy ordering, no wait times for placing orders, quick quotes, and extremely low commissions. Selecting the right online broker for your online option trading is the key to your success in online option trading. A good online broker/site can help you with knowledge, historical information, up to date data, charts, market comments, warnings, recommendations and watches.
What is the profit or return for a Binary Option?
a) You just need to have the correct idea on the asset price whether it will move up or down in order to make a 70-85% return in one hour or whatever is the expiry time of the binary options contract. It does not matter how far the asset price move. You only need to predict whether the asset price will move up or down.
Let’s take a simple example to illustrate how it works; hypothetically you think that IBM stock will be above $81.20 per share after the end of one hour.
At present, the IBM stock price is $81.10 per share. You buy one binary option call on IBM stock with an expiry of 1 hour and strike price of $81.20 by paying a premium of say $12. If on the end of one hour, the IBM stock price is above $81.20 say just $81.21, you win $100 and if the price was below $81.20, you get zero payoff and lose your initial investment of $12 that you had made in buying the call. So, your risk in this trade was only $12. This is the max amount you can lose if the trade went wrong. You can do this over and over again or you can purchase as many options as you can afford.
To simplify, you determine if the asset is going to go up or down in a short period of time. You then take a call or put at the price the asset is trading at. At the expiry time if the asset has passed your goal, you Are in the Money.. a winner and you are paid the preselected profit.
Why don't I receive an all of the return?
You are not concerned with the payout or the magnitude of the move, simply that you prediction using your knowledge that the stock or option would move in the direction you invested in. The return is preset at the time of the trade. There is nothing secret.
What is the underlying asset, how are they chosen?
Option sites offer a variety of trades, but they are all based on the underlying asset, these vary from indexes to commodities, to currencies to stocks. These all have set values at a prescribed time. If the asset is traded on a market, you can trade binary options. (most assets ). IOption offers a variety of assets, ranging from commodities to currency, stocks to indices, over 85 in all.
Why can I trade or buy options on only certain assets?
Binary trades are usually short term, which makes it difficult to analyze assets that lack market volume. As a result, An Option Site offers assets that have a high trading volume. This gives our traders the best opportunity to make a profit. The asset must have market volume and a prescribed reporting system based on time and value.
What trading platforms or strategies does the Option Site offer?
An Option Site have several offers :
- Up Down
- One Touch
- 60 Second
- Option Builder
What is the” Target Price” of an Option or Trade?
The TARGET price represents the price at which An Option Site is willing to sell a particular option. Customers may buy an option that is higher or lower than the Target Price depending on whether they anticipate the market value of the asset to rise or fall.
What does the time of an Option or Trade expire?
The expiry time is the day and time that the investor has set on his purchase of his option. This is the precise time based on the time in the trading market. iOption now offers long term expiry, take the end of the day, the month or the year. Build trading strategies using expiry times.
Can I close or trade an Option before the expiration time?
An option can be traded or sold up till the No-More Trades is flagged. You can trade or sell your option immediately after your trade has been confirmed until a few minutes before the expiration. Market volatility in some cases might allow you to make a great amount of profit in just a few minutes.
What is the expiry level of an Option or Trade?
At the expiration time of the option, you will either be in the money or out of the money. It is as simple as that, if your option was for your underlying asset to be over a price and it is, you win, if not you lose...and the opposite is also true for calls. It a win or lose trade.
What is "IN the money" and "OUT of the money"
In the money is exactly what it sounds like, your option and the market performed as you determined and your option has paid off. Out of the money, means your option did not meet its set performance and you lose your initial purchase price.
What happens if my Option or Trade expires at the exact Target Price?
This is a rare occurrence, but if your option expires At the money, in most cases the broker will return your initial investment. As in blackjack this is a push.
What is the Minimum Investment Amount per Option or Trade?
The minimum investment amount for a single trade is usually $10 USD. The amount varies, however, between different countries and different currencies. This is specified by your broker in your account information or FAQ.
What is the Maximum Investment Amount per Option or Trade?
The maximum investment amount for a UpDown option is usually $2000 USD. The maximum investment amount for a One Touch or Range option is usually $500USD. However, this amount varies between asset classes.
What is the Maximum number of Options, Trades, or amount of money that can be open at any given time?
There is no limit on the number of options that can be purchased at any given time. However, there is an exposure limit, which is usually $2,000 USD. This represents the total value of all open positions at any given time.
Do I need to deposit funds when I register?
You do not need to post any funds to register and open an account, but before you are able to trade you will have to deposit funds into your account in your designated currency.
What is the minimum initial deposit amount?
The minimum opening deposit required to start trading is $200 USD or the equivalent amount in one of the available trading currencies.
How is the currency for my account determined?
At the time of registration, your trading currency will be selected. Please note that your selected currency cannot be changed after the account has been funded.
How do I make a request for funds from my account?
Withdrawal requests will be processed by the iOption Site and the requested amount deposited in the source of the initial investment. If this is not possible, the Option Site will deposit the withdrawal by wire transfer directly to a bank account in the name of the account holder as specified.
What is the minimum withdrawal amount?
The minimum withdrawal amount is $10 USD. The iOption Site provides you with one withdrawal per month exempt from commission fees.
Can I stop a withdrawal?
A request for withdrawal that has not yet been processed can be canceled. In the event of a cancellation, the funds will be returned to you’re the Option Site account.
How can I register to become an iOption Site customer?
Simply click the Open Account button or tab on any page and follow a simple set of instructions. You do not need to make a deposit in order to register. It is a simple fast process.
What if I forget my password?
If you have forgotten your password, click on the; forgot your password? A link that appears next to the login box. Your password will be sent to the email address you provided when you registered with the iOption Site.
What is the computer or technical requirement for trading at the iOption Site?
You do not need any additional software or special computers. Any computer that can connect you to the internet can be used for trading.
How is my personal information and account data protected?
The Option Site by your computer is secured with a 128bit SSL encryption certificate provided by Thwate. All of our data is saved in a safe secure backed up system, with every bit of more technology used to protect you from hackers.