It is said that variety is the spice of life. This premise holds truth even for the investors who are roaring to harvest their profit out of their hard earned money invested. They ride on many options such as mutual funds, stocks and bonds. But the real option is “option” which brings the sophisticated streak out of the investors. But these sophistication comes with an unalienable maturity of deciding when to “Buy” your call and when to sell your “Put”.
However July 2008 made the plain vanilla option a flavoured one. The binary trading found its way from over the counter market to the Chicago Board of option exchange. Binary options or Digital option as it is also known makes the option trading approachable within the realms of reality. It’s biggest advantage is the offering of a fixed payout if the given sets of condition in option are met. Chicago Board of Option exchange has rightfully listed it on the S&P 500 index. The domain of binary trading is restricted to S&P 500 as it is not extended to currency, commodity or individual equity market.
The fact that differentiates standard option and the binary trading is the movement of the market. In vanilla option, market has to move a great deal to produce a payout but in Binary trading (Digital Trading) a small shift in the Financial instrument can produce the desired payout.
The Binary market majorly functions on the short term movement of financial market due to its current market pricing. This market offers less complication in comparison with the vanilla (standard) option. Thus it becomes easier to comprehend and operate.
It also allows the speculation over a period of time. They are named Hit or Miss option. They purely work on time frame and the price range. The market maker or broker is the decision maker of the price. To give a verdict that binary can erase all the worries that standard option creates would be a false giving. As all the success full financial decision stems out of a clear understanding even binary trading demands for just one parameter and that is one trading above or below the prices after a specified time.
Posts by SpeakBindas Editorial Team.