Different type of Binary Trades
There are several different types of binary options to choose from when binary trading.
Personally, I like to keep things simple by using the Cash or Nothing options while I trade, but
there are other options available, as well. Some people like these other types of options better
and some people don’t, it all depends on your own personal preference. I will talk about a few
of the major binary options.
Cash or Nothing:
This is the most popular type of option, it’s offered by all Binary Options Broker. It is essentially all or nothing trading. For example, if you think Google is going to close above $300 and it’s currently trading at $300 when you place a call one of two things will happen: if it closes $.01 or anywhere above $300 you will get 75-95% profit, but if it closes below $300 you will lose your entire investment. Sometimes, brokers will return a bit of percent for Out-Of-The-Money trades, mean that when you lost a trade, you’ll still be returned a bit of your initial investment.
In this type of binary options, and with the other types, good money management is
important. If you don’t manage your money, you will lose your investments. However, if you
manage your money right, then Cash or Nothing options are incredibly simple. In fact, the
simplicity of this type of trading is why it is so popular among traders. You either place a call
(you think it’s going to go up) or a put (you think it’s going to go down) and you’re done. No
thrills, no worries.
Touch Options/No Touch:
This type of option is also fairly simple. In Touch Options/ No Touch you are basically betting that the prices will or won’t touch a specific level by the
predetermined expiration. For example, if Google is hitting a massive resistance at $300 and it
can’t break through, you would then place a trade saying that Google won’t touch $301 by the
end of expiration. If it doesn’t touch $301 then you would end in the money.
If Google was sitting on a $300 support level you would guess it’s going to continue to
305 dollars, so you would bet that Google would hit $305 by the end of expiration. These types
of options are the best during high volatility (fast moving markets). If the liquidity (volume, how
many people are trading) is low then you might have random spikes that could mess you up!
Another type of option is the range option. In this type of option, if the
asset you are looking to trade is channeling in a range (going sideways) then you can trade
range options. If you say that the asset is going to close within the range and it does, then you
will be itm (in the money). On the other hand, if it closes outside of the range than you would
be otm (out of the money).
Conversely you can also say that the option is going to close outside of the range, and if
it closes out of the range then you will also be itm. In this case, if the option closes inside the
range then you are otm.