An Introduction to Binary Options

There are four categories of binary options: commodities, currencies, and indices.

Topics Addressed

  • Type of Binary Option Assets
  • Stocks
  • Commodities
  • Forex
  • Indices

Binary options, also known as digital options, exotic options, and all-or-nothing options, are short-term contracts is which a trader bets on the direction that an asset will take in a specified amount of time. Binary options are gaining in popularity at an exponential rate due to its ingenious design; simplicity. Due to the reason that binary options have fixed-odds with only two possible outcomes, either "in the money" or "out of the money", traders have control, flexibility, and accessibility.

These simple predictions regarding the direction of an asset, which are derived from stocks, commodities, currencies, and indices, have very high fixed returns and range from 70% upwards to 500%. These incredible returns are luring traders to take advantage of these percentages and are pulling away from traditional investments.

Type of Binary Option Assets

There are four categories of binary options in which traders can choose to from: commodities, currencies, and indices. Within these four categories, there are hundreds of assets to trade.

Stocks

Stocks are shares of ownership within a corporation. In relation to binary options, stocks are not purchased; a bet is placed regarding the direction of price of an asset within an expiry time. There are hundreds of stocks available to trade, a few of which are: Apple, Boeing, Exxon Mobil, Google, McDonald's, Microsoft, Nike, Vodafone, ING GROUP, COCA COLA
Gazprom, BP, Lukoil, Rolls Royce, Tata Motors, and Turkcell.

Commodities

Commodities are natural materials of value that can be sold in real-time. Commodities are known for being volatile due to market fluctuations. Commodities are highly popular within the binary options sector due to this reason; market fluctuations cause sustainable price movement which can lead to extreme profits for the trader. Examples of commodities are, but not limited to: coffee, sugar copper, silver, gold, and oil.

Forex

Forex, short for foreign exchange, is the market in which currencies are traded. This market is the largest and most liquid market in the world and is unique from any other market due to the reason that it is open 24/7/365 and in which there is no central market place.

In relation to binary options, forex are paired currencies in which a bet is placed to determine whether or the not the rival pair will increase or decrease in a given amount of time. The following pairs are a shortened list of typical currency pairs: AUD/USD, EUR/GBP, EUR/JPY, GBP/JPY, NZD/USD, EUR/USD, USD/GBP, USD/JPY, USD/RAND, USD/CAD,and USD/CHF.

Indices

Indices, plural for index, are designed to measure the overall price change in an overall market such as the bond market or the stock market. In regards to binary options, bets are placed on a particular index determining where not the price of that index will either increase or decrease in a specified time frame. There are several indices worldwide and that are offered for trade, some of which are as follows: Dow, S&P500, Nasdaq 100, BOVESPA (Brazil), DAX (Germany), CAC (France), FTSE (England), IPC (Mexico), MICEX 10 (Russia), RTS (Russia), Bombay 30 (India), Hang Seng (China-Hong Kong), Jakarta (Indonesia), KLSE Future (Kuala Laumpur), SSE 180 (China - Shanghai Composite), Dubai (Middle East), Kuwait (Middle East), Qatar (Middle East), EGX 30 (Egypt), Tadawul, ISE 30, and Oman MSM 30 (Middle East).

See also

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