The Classifications ofBinary Options

A binary option investor simply has to predict the direction of the value of the underlying asset will follow in the immediate future.There is a specific time limit for each contract entered and you must be able to accurately predict the turn of your investment. Once the prediction hits correct, the investor earns from about 50 to 85 percent of his investment plus 100 percent of his capital back. An ‘off’ prediction will lose the investor 85 percent or more of his investment capital.

A sub-classification of binary options is based on the call or put betting option. Having an understanding of all the different types and classification of options will definitely give you the tools for making up your own trading strategy that to work with.

·         Cash or nothing.The investor needs to purchase a contract on the performance of the stock within the expiry date. He stands to earn either a fixed amount or nothing based on the accuracy of his predictions within the expiry date.

·         Asset or nothing. The investor predicts directly on the price of the underlying asset and stands to earn a profit equal to the price of betted on only upon success.

·         One touch. The trader is required to set a target value called the ‘strike price’ which he assumes the asset will reach within the time limit.  Upon the accuracy of the prediction, the trader stands to earn the predetermined price set in the contract.

·         No touch.The opposite of one touch where in the assumption is that the asset will never reach the strike price within the expiry date.

·         Double-one-touch.The concept is the same with one touch, but only with two strike prices set.

·         Double-no-touch.The concept is the same with no touch, but only with two strike prices set.

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