Binary Options Trading  (including weekend volatility indices trading)

​What are Binary Options?

Binary Options allow investors to speculate the price movement of their underlying assets such as stock, index, commodities or currency pairs (FX). Binary Options are different from other financial instruments because they have a fixed payoff at their expiration. This means that the traders know from the beginning the amount they may earn or lose. And this is the reason they are called Binary Options. Because they can only have two possible payoffs. A positive and a negative.

It doesn’t matter if the underlying asset price is one cent over the strike price or if it is one dollar over the strike price.The binary option contract payoff is the same.



Advantages of Binary Options Over Spot Forex

  
Know your exact risk. With binary options, you always know your exact risk and profit before you enter the trade. With forex, even with a stop loss, you can get hit by slippage when the market moves quickly such as on a major news event or economic data and your stop might not get filled at the price you want.

No additional transaction costs. Transaction costs are factored in to the payout, so there are no additional costs, In spot forex, there is the spread which can widen at certain times and sometimes commission too, depending on your broker.

No stop loss to get hit. How many times in trading regular forex has your stop loss been hit before the trade turns around and does exactly what you thought it would. Well with binaries as there’s no stop loss to set, in these situations, you would still be in the trade. As long as you are above (or below) the level you set at the expiry time even if it’s just by a tenth of a pip, you will still win.

Less complicated. When entering a trade there’s much less chance of errors. There’s no working out of pip values and stop loss setting, and no need to manage the trade, so no adjusting of targets or stop levels
No trading on margin. In forex you can use leverage sometimes up to 500:1, so there can be big winners but also big losers. In binaries, you don’t use marging. There’s still the potential to make high profits, often 90% but you will never get a margin call.
  

​Binary Call Options

​Binary call options gain value when the underlying security is trading at more than the strike price at expiration. Select “Call” to predict that the underlying asset will exceed the option’s strike price at expiration.

Binary Put Options

Binary put options gain value when the underlying security is trading at less than the strike price at expiration. Select “Put” to predict that the underlying asset will fall below the option’s strike price at expiration.


So, Binary Option positions can be Call or Put. If a trader believes the market is rising, she/he would purchase a “call .” If the trader believes the market is falling, she/he would buy a “put .” For a call to make money, the price must be above the strike price at the expiry time. For a put to make money, the price must be below the strike price at the expiry time.
If a trader wagers correctly on the market’s direction and the price at the time of expiry is on the correct side of the strike price, the trader is paid a fixed return regardless of how much the instrument moved. A trader who wagers incorrectly on the market’s direction loses her/his investment.

Binary Options are not traded on a margin. This means that the trader cannot open a position that is larger than the funds he has in his account and therefore cannot lose more than the initial investment. They can be traded as Call or Put positions depending on where the investor deems that the price of the underlying asset will move up or down. The expiry period can be as short as 30 seconds and up to 6 months.





The Binary Options market is ever increasing, but is a largely unregulated market. We recommend 24option.com .They are an excellent broker and highly reputable, and through their CySEC regulation, are members of the EU Investor Compensation Fund, where up to EUR20,000 is protected. This should be a priority when choosing a broker. To learn more and discover their excellent education resouces, click  here .

Weekend trading

Do you only have time to trade at the weekend? Binary.com 's volatility indices can be traded 24/7. Learn more fxjunkies.co.uk/weekend-trading
Screenshot of recent volatility index trade: