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What Are Binary Options?

Updated on December 10, 2011

Simple understanding...

There are two ways that I would use to describe Binary Options, in as simple a way as possible. The first, is that Binary Options are basically a chance to bet on speculation. You predict if the stock will go up or down, but you don't really purchase the stock itself. The second way that you could look at it, is that you do purchase the stock, but only temporarily. Either way, your main goal is to make money from predicting whether the stock will rise or fall, in a short about of time.

Basic Binary Option Trading How To

When you trade Binary Options, you only have two options: CALL or PUT.

To CALL, is to predict that the stock will go up.

To PUT, is to predict that the stock will go down.

You place a predetermined amount of money on your prediction of the stocks behavior in a predetermined amount of time. You might bet that the RIGH stock will go down by 3 points in the next hour, and let's say the stocks purchase is $10. You bet on three shares, making your total bet $30, and then wait to see if your prediction comes true.

So to trade Binary Options, you need to pay attention to the behavior of your preferred stock, and then make short-term predictions on how the stock will behave. If you spend long enough researching the stocks you want to trade, that will give you an edge, and you might consider using leverage to gain more. Just keep in mind that you also loose more if your prediction is bunk.

If all goes well, and the stock does as you predicted, you'll find yourself In-The-Money. Likewise, if the stock doesn't rise as much as you said it did, you will be Out-Of-The-Money. The goal, obviously, is to get ITM every time.

Let's continue learning!

I am still learning lots about Binary Options, and I intend to share as I go. This hub is short and to the point, so if you feel there's something I missed, feel free to let me know!

What do you know about Binary Options?

Submit a Comment

  • Paradise7 profile image

    Paradise7 

    6 years ago from Upstate New York

    Binary Optiions is a game I wouldn't get into, just because you stand to lose, long term, and I really don't want to get into a long involved explanation as to why. Let's just say you're betting against a computer program, in a way.

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