Binary options trading: an all or nothing proposition?

Binary options are simple commercial instruments that generally pay a high and fixed return or nothing at all. Therefore, it is "binary." There can only be two possible outcomes to an operation: wind or loss. For these reasons, binary (or digital) settings are also called "all or nothing" settings. And this is mainly an accurate description of the situation, but it does not tell the whole story. But first, a little more about this relatively little-known financial instrument.

Like traditional options, binary options are available in a number of underlying assets. Stocks, indices, commodities and currencies are the most popular assets to rely on. Unlike traditional options, binary companies pay a fixed and known return that does not depend on where the "inside money" option is. If the asset where you made a purchase option order is higher than the exercise price as much as a pip / tick, you get the same high top binary options brokers in canada as if you had the money for 100 points.

Let's look at a brief example, okay?

To make it easy, we use the S&P 500 in our example. Suppose we are generally optimistic about this index and specifically over the next week (although in some cases it may be month, day, hour or even less). We open a binary option in the S & P500 for $ 1000, which expires in a week and returns a 78% return. Fast forward a week and S&P, after ups and downs, ends just 1 point above the price we bought it a week ago. Well, in this case, we would be paid $ 1,780 for this successful exchange.

But what if we were wrong? In that case, they wouldn't give us anything back in most cases. However, as previously suggested, this is not always the case. Some selected binary option brokers actually offer a significant return up to 15% on loss of operations. A structure like this can be much better for those new to binary options trading or greater risk aversion than the standard structure, where nothing is returned in case of loss of operations.

The most popular broker offering this return structure is Anyoption. Anyoption offers a fixed return of 15% on all lost trades and a return of 61-71% on winning trades. There is a commitment involved. You sacrifice some potential returns on winning operations in return for the 15% safety return on your losing operations. For the most risk-tolerant or experienced trader binary options, this may not be the best option, but for the beginner or more risk-averse, it may be something to consider choosing a broker that provides a return on losing operations.