There are many people who come across the term binary options, but do not have an in-depth idea of it. Although it might seem to be something relatively new, these are said to be traded for more than a decade and originally thought to be traded over counter generally between two and more institutional investors. It includes mostly investment banking and hedge funds. The retain traders were said to be granted rights to trade the binary options only from 2008 onwards. Since, then its popularity is on the rise and is presumed to go over the roof.
About binary options
Binary options could be best summed as trade, which offers just two distinct outcomes. It is either the trade finishes in money (winner) or just out of money (loser). However, this is said to be in start contract towards the traditional available vanilla options where the concepts like volatility, time decay (theta), time to expiration, strike price, all of them which go into pricing.
How does it work?
These are considered to be ordinary risk reward proposition that is clearly stated before entering the trade. Most trading sties do place return percentage around 60% – 90% for winning the trades and around 0% – 15% on return of capital in regards to losing trades. Generally binary option signals are offered on different underlying assets across various trading platforms.
Stocks on offer
We have noticed that stocks also called equities are provided across many platforms. However, the stock numbers are limited. The stocks typically are only offered on the biggest and most liquid names like Google, Apple, Microsoft, JP Morgan, Intel, etc. Technology stocks also make up a majority of binary options that are stock based. Also, you can find popular commodities like silver, gold, natural gas, oil, copper and other major indexes all over the globe which can be found on several trading platforms.