Every broker of binary options offer a wide spectrum of options. As trader you will always wonder what exactly is meant with them and which kinds of binary options are available. Wanting to overtrump other brokers, each broker tries to sell as many options as possible – many different names are in use although they actually mean the same thing. In addition, some brokers think that they must translate their options, which extends the terms jungle even more. This article shows all the common options that one can trade at different brokers in 2017. One broker that offers a wide variety of options is market leader IQoption where you’ll also experience fast trading, an excellent platform and great support. Click here to signup at IQoption now!
Classical binary options: Put/Call and High/Low
This type of options is a worldwide standard and the actual core of binary options trading. Here, you speculate whether the underlying asset will be lower or higher than the predetermined rate at a specific time in future. For example, you can buy an option from which you can make a profit if in 60 minutes the oil price stays over $100. Similarly, you can sell an option and make a profit if the oil price stays under $100. It is as easy as option trading can be. Payouts depend on the broker and amount to for instance 80% and in case of losing 10%. That means that for a $100 Option you receive $180 back if you are right and the option is in the money and only $10 if the option is not in the money.
Although it is a worldwide standard, these options are called differently by different brokers. Some call them Put/Call, some High/Low and there are surely some unusual names as ”up and down”.
Options with price touch: One Touch
The terms for these kinds of options are much more manageable. They are called as One Touch Options by 99% of the brokers and they are just a little bit more complicated than the classical High/Low options. You don’t need to speculate that rate will be lower or greater than a specific price but instead if the option will touch a specific rate or not on the expiry date.
If the rate is higher than the current rate, then it is a Call Option, if it is lower it is a Put Option. If you buy a Call Option you win when the rate touches a predefined rate. If you sell a Call Option, then you can make a profit only when the rate is not touched. If you buy a Put Option you win when the lower rate is touched and lose when it’s not touched. In case of selling, of course just the opposite is the case.
What counts is the fact that One Touch Options can only be traded during weekends. At the weekend it’s decided which rate will be valid as the “Touch-Rate” for the coming week. So, you cannot simply obtain a Touch-Option on Wednesday, which should touch a rate in the next 60 Minutes or not.
One Touch Options are becoming more and more popular. They are in demand in volatile markets, since the probability that there are strong fluctuations increases, correspondingly. So that the underlying asset can be well touched to a specific rate.
Buyback of options: Option+
Some brokers also offer options, which can be bought back. It is possible for options which are either in the money or out of the money – but in this respect there are important differences among brokers. At Anyoption, for example, with the so called Option+ you can sell back only those options that are in the money and make 60% profit. Compared to 70% on the expiry date, it is of course less but you should also take into consideration that you don’t have to take any risk anymore. At the end of the day, you can take the money immediately; you don’t have to wait until the option expires.
There are other brokers which allow you to sell an option back which is out of the money. Of course you don’t get all the money back, but compared with the small amount that you get when an option expires out of the money (if you get anything at all), the amount you obtain in this way is by all means acceptable. Such options are however offered only by a few brokers.
Trading with boundaries: Boundary Options
With these options, a lower and an upper boundary is defined, the rate over a specific timeframe can either lie inside or outside of this boundary. With a boundary option, you bet whether the rate will stay between two boundaries and want of course that there is no volatility and there is only a sideward movement. On the other hand, if you speculate that the rate does not fluctuate in the boundary, you will be delighted of course from the price motions in all directions. So, in volatile markets you can be happy if you have the chance to trade with boundary options!
Create your own options
Brokers such as iOption offer the possibility to create your own options. It’s a very innovative story that can be very lucrative for all traders. At least, when you know how to construct your options. It is possible to determine different properties such as runtime, underlying asset and payout and calculate even a risk factor at the same time. So, you can have the whole control over trading with binary options!