Binary options are options that give the investor payment or fixed return if it fulfills the option criterion. What makes the difference in these investment instruments is the fact that investors received a fixed payment, a return based on the underlying asset meets the specific criteria described as part of the definition of the option.
When trading with binary options, the trader or investor will buy the option you want to purchase. Each option has a nominal value over which the investor will have to decide whether to place a call or put, ie if the value of the option at maturity will be above or below the value at the time of purchase. It can be said that when investing in binary options, the important thing is, in fact, the tendency of the financial instrument, be it high or low.
Advantages of Binary Options:
- The great common denominator of binary options is simple, can only be predicted if the underlying asset closes above or below the purchase price.
The binary options are easy to understand and have an easy way to run.
- The investor only needs to project the direction of the underlying asset. These options allow greater risk control and receive a fixed return.
- The return or payment of a binary option is fixed and pre-determined in advance, so you know from the outset the potential gains and risks, unlike the traditional options.
- Binary options are settled at maturity, no matter how varied the underlying asset is or the market fluctuation, it is sufficient to finalize the transaction within the price. If you only managed one pip in your favor, it is enough to charge the fixed return.
- Binary options allow simple diversification.
- This type of option is ideal for short-term investors, where trading takes place on the same day.
- Binary options can only be traded 24 hours a day because they are issued taking into account the different time zones in the world. The underlying assets on which the option depends are traded in the major global centers, allowing 24-hour trading without interruption.
