Binary Options Trade Types
There are a wide range of digital Binary options trade types provided by brokers that you can use as the basis of your trading strategy.
The ‘higher or lower’ binary contract is the classic binary trade. It is also known as the ‘Call/Put option. You determine whether or not the asset price will be higher or lower than the entry price by the termination of the contract.
If you believe that the asset will finish higher than the current level on expiry then you would purchase a ‘Call’ option.
If you believe that the asset will finish lower than the current level on expiry then you would purchase a ‘Put’ option.
Most brokers will offer option contracts for this option type on an hourly or end of day basis. However it is increasingly possible to trade shorter time periods which many brokers are now offering.
The payout you receive for in-the-money trades will depend upon the asset you trade and the yield that the broker offers for the payout.
Typically you should expect to see a return anywhere from 70-90% for these option types.
Touch Contract Options
The touch binary option contract is gaining in popularity and is now increasingly being offered by many binary brokers.
With these contract types you select whether or not you believe that the price of the underlying asset will ‘touch’ a set level over the course of the contract. This can be a level that is either higher or lower than the current price of the asset.
The payout is made dependent upon whether or not the asset price attains the target price set at the time of placing the contract. If the leve is touched then the contract will pay out the agreed return. If it is not then the contract expires worthless.
These option types are typically offered on a daily basis . Some brokers also offer weekend one touch options with the broker setting the target distance offered in the contract.
Returns offered for these options are similar to the High/ Low contract, although you can earn up to 700% with some of the weekend contracts.
Boundary Contract Options (Range)
The Boundary binary contract is similar to the Touch option in that a price level is specified on an asset. However in this instance two levels are specified (an upper and lower target), that come together to form a boundary range. The difference here is that neither level can be touched for before the expiry time set on the contract if the options is to pay out.
The range trade can be used when volatility is low and you identify a time to profit from little movement in the price of an asset.
In addition to trading the asset price to stay inside the range you can with some brokers also chose to profit from the price of an asset breaking out of a set range. Much like the Touch contract this is play on the expected volatility of price movement in an asset.
60 Second Options
The sixty second option contract is essentially the same as the standard Call or Put option. The difference is the shorter expiry time used on the contract. While these contracts offer the potential for fast pay outs, they can be quite difficult to trade due to the short time period. However in a strong market they can be used to book repeatable profits from a trend.
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