How to Make Money Trading Binary Options

Anyone looking to invest money without the headache of doing extensive research should explore trading binary options. Binary options, while recently introduced in 2008 in the United States, has been a popular trading option in Europe and other places around the world. Binary options offer simplicity in investment giving the investor only two possible outcomes before they invest, hence the term binary options. The two possible outcomes offered through binary options are simply all or nothing.

Investors in binary option invest a predetermined amount of money in a particular option. The two investment options are either a call option or a put option. These choices are based on a simple gamble of whether a particular stock price or strike price is trading above or below the mark in a specific time frame call the expiration time. The expiration time frame can be an hour, a day, or even a week later. Investors will need to be familiar with trends of a particular currency, index, stock, or commodity is in a specific time frame in order to make the best decision possible.

A call option to put it simply is an investment on a binary option that an investor believes will expire at a higher amount than the initial price at the time of investment. For example, ABC’s stocks trade currently at a price of $26 and a binary option investor believes that the strike price will be above that amount in one hour. He or she would invest in a call option at the set amount. If he or she was correct in his or her assumption then the initial investment will turn out a predetermined profit, otherwise his or her gain would be nothing at all and would have lost the initial investment.

A put option is just the opposite of the call option. If an investor believes the strike price will be lower than initial price then he or she would invest in the put option. If ABC’s stock, as used in the call option example, closed at the expiration time below the initial price then the binary option investor who invested in the put option would gain the predetermined profit. If the strike price was above the initial price then the investor in the put option would gain nothing again losing the initial investment.

Getting started investing in binary options is as simple as getting signed up on a website platform that specializes in binary options. Investors should also keep in mind that like any investment opportunity there is a risk involved. Investments in binary options do not guarantee a profit and comes with the risk of losing investments in possibly short amounts of time. While extensive research is not necessary there is still a narrow area of research that needs to be done and success would be determined by how well an investor is familiar with the trends associated with the particular asset the investor will be purchasing options in.