Binary options also called digital options or fixed-return options (FRO) are a simple way to trade price fluctuations in a wide range of financial markets. Binary options have different profits, costs, risks, liquidity structure and investment processes than the traditional (vanilla) options. The key distinguishing features of binaries are:
-Easy to trade – simple and straightforward to understand
-Predetermined payouts and risks – unlike a traditional vanilla option, the possible gain is binomial, predefined and works as “all-or-nothing”
-Payouts – In-the-money contracts yield returns starting from 70% of the paid premium/contract size up to 90%
-Variety of markets – the underlying instruments may be individual stocks, indices, Forex, commodities, etc.
-Small trading amounts, low deposit required – binary options contracts/premium with Dukascopy start from as low as USD 1
-No commissions,no fees in addition to the premium paid by the trader.
-Numerous strike prices and expiry dates – for call/put binary options the strike price is the price at the start of the option contract
Binary options offer a non-linear return and a way to gain up to 90% of the initial investment/premium if the contract terminates In-the-money.
Entering in binary options is speculative and involves the risk of losing your entire investment. You should only trade money you can afford to lose entirely.