21/03/2025
Binary options are a type of financial instrument that allows traders to predict the direction of an underlying asset's price movement. They are called "binary" because there are only two possible outcomes.
Here's a breakdown:
Key Characteristics
1. *Underlying Asset*: Binary options are based on various assets, such as:
1. Currencies (e.g., EUR/USD)
2. Commodities (e.g., gold, oil)
3. Stocks (e.g., Apple, Google)
4. Indices (e.g., S&P 500, Dow Jones)
2. *Prediction*: Traders predict whether the asset's price will:
1. *Rise* (call option)
2. *Fall* (put option)
3. *Expiry Time*: Binary options have a set expiry time, which can range from:
1. 30 seconds
2. 1 minute
3. 1 hour
4. End of day
5. End of week
4. *Payout*: If the trader's prediction is correct, they receive a payout, typically:
1. A fixed percentage of the investment (e.g., 70%, 80%)
2. A fixed amount
How Binary Options Work
1. *Investment*: Traders invest a certain amount of money in a binary option.
2. *Prediction*: Traders predict the direction of the asset's price movement.
3. *Expiry*: The option expires at the set time.
4. *Outcome*: If the trader's prediction is correct, they receive the payout. Otherwise, they lose their investment.
