Financials: understanding binary options

Learn the basics for buying binary options at online casinos.

Many online casinos now facilitate certain forms of stock market speculation, most commonly ‘binary options’. As this binary options infographic explains, they have been tradable since 2008. While more straightforward than other financial options, playing the market with binary options is still a complex process and it takes a significant amount of knowledge and skill to make this kind of trading profitable. This step-by-step guide will introduce you to the fundamentals of binary options trading.

What are binary options?

In finance, an ‘option’ is an ‘over-the-counter’ contract in which the buyer is given the right to buy or sell an instrument (tradable resource) within a set time period. In effect, you buy stock in an intrinsically valuable commodity and can attempt to sell it on at a profit.

A binary option provides only two possible outcomes at the time your option expires (hence ‘binary’): either you receive a fixed pay-off or you lose your option with zero return. You can buy a binary option in ‘either direction,’ meaning you can speculate that it will increase or decrease in value within the expiration period.

When purchasing binary options, you can buy either:

‘Call/up’ options: you will receive a payoff if your option has increased in value when it expires.

‘Put/down’ options: you will receive a payoff if your option has decreased in value when it expires.

For example, assume you purchased a binary call option on Foreign Exchange (Forex) at £500 with a £10,000 binary pay-off. If at the maturity date (time of expiration) your option was trading at above £500, you would receive £10,000. If it was trading at less than £500, you would receive nothing. In order to trade binary options, one needs to visit a binary options broker. As Investoo explains, choosing a binary option broker involves scrutinising regulation, withdrawal speeds and payout features (typically, the best brokers offer 90%+ payouts).

Buying binary options

financials graph

Check the market

Most financial clients publish graphs of market fluctuations – you can check these in advance of purchasing options to inform your trading decision.

financials options

Striking an option

Check out your financial client’s list of traded instruments. You purchase a certain amount of stock at a ‘strike price’ – this will be used to determine whether or not your option is successful. You also determine the length of time to the maturity date. There are robot products, such as Binary Robot 365, that can automate the trading process.

financials call or put

Call or put?

You can purchase your option as a ‘call’ or ‘put’ – assuming (respectively) that it will be sold at above or below the strike rate at the maturity date. The binary pay-off will be determined at this stage and is fixed, irrespective of market fluctuations.

financials maturity date

Maturity date

When the maturity date arrives, you will receive a pay-out if your elected option is successful or nothing at all if it is unsuccessful.

Instruments

Here are some examples of the markets for which you can purchase binary options:

  • Gold and silver: value determined by rates from international banks.
  • Oil: the price of oil barrels as quoted by an elected market.
  • Foreign exchange pairs (Forex): trading currencies against one another based on fluctuations in value. Value determined by international banks.
  • Market indices: the status of global stock markets, as quoted by their respective nations.

The right financial clients

Speculate to accumulate with the bet financial clients, as chosen by our gambling experts.

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