Tecademic chris record Digital options, all or nothing options or binary options are relatively new types of investment instruments and have been available for traders since 2008. Also known as ORF or fixed return options, these instruments have become quite popular over a very short period because of their relative simplicity when it comes to operation – even for traders who have little to no forex trading experience. These trading options are categorized as exotic options, since while they are quite simple to operate, the calculations behind pricing are quite complex.
Apart from that, binary options are based on a couple of different underlying instruments like commodities, currency pairs, stocks, and stock indices amongst others. Through these, the trader is able to cover several markets using one financial derivative.
When it comes to trading tecademic chris record binary options, traders do not transact directly with specific underlying instruments, but speculate the prices; that is, they try to predict whether a price will go up or down. As such, there are two possible outcomes – the price either ends above the entry price or below it when the option expires – hence the name.
As such, if you, the trader, predicted that a price on a specific option will go up and at the end of the said option ends with the price up, even if it’s by 1 cent, then the said option is said to have ended “In The Money”, meaning that the operation was successful. When this happens, you end up gaining a fixed gain, depending on the period of the contract and the underlying asset and can earn up anywhere from 70%-80% of the amount you invested. For instance, if you invested $1,000 on an option and at the end of the contract your prediction ended up “In The Money”, then your profit will be anywhere from $700-$850.
If your prediction is wrong, then it is said to be “Out The Money”. When this happens, you lose the amount you invested; however, an amount ranging from 10% to 15% can be recovered.
Often, you will find that most binary options last for about an hour; however, there are still options that can last for 1 day, 1 week, and even 1 month.
The Advantages of Binary Options Trading
Binary options provide controlled risk: the percentage of a potential earning can be predicted right from the start not forgetting the amount you could lose on each trade – making it easier to manage your money.
Trading tecademic chris record binaries is relatively easy: binary options operations are simple with the trader only being required to determine if an asset’s price will rise or fall.
Attractive performance: the beauty of trading binaries is that the potential of making profits is relatively high with yields reaching as high 70 to 80%. This is further compounded by the fact that your profits are awarded as soon as your predicted price moves by just one point in your favor.
Hedging: the great thing about tecademic chris record binary options is that they can be used to hedge the positions of other instruments. This way, you can use them to eliminate or reduce losses on transactions with currency pair for instance.
Binary options contracts can be issued at any time: the great thing about digital option contracts is that they can be issued at almost any time of the day; providing traders the chance to trade at different times of the day. However, these contracts have expiration dates. Nonetheless, they constantly offer new opportunities to traders.