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The Importance Of Managing Risk While Trading In Binary Options

In the world of management, risk and return are two sides of the same coin. This is so because of the fact that any trade that gives a high return is going to be risky at the same time i.e. without risk there is no return. There are many different investment options out there which […]

By binbet.com | Managing Risk | binary options strategies, high returns, investment principles, return, risk, risk management | 0 Comments | Like

… But What’s a Binary Option?

A binary option is a type of option where the payoff is either some fixed amount of some asset or nothing at all. The two main types of binary options are the cash-or-nothing binary option and the asset-or-nothing binary option. The cash-or-nothing binary option pays some fixed amount of cash if the option expires in-the-money while the asset-or-nothing pays the value of the underlying security. The options are binary in nature because there are only two possible outcomes. They are also called all-or-nothing options, digital options (more common in forex/interest rate markets), and Fixed Return Options (FROs) (on the American Stock Exchange). Binary options are usually European-style options.

For example, a purchase is made of a binary cash-or-nothing call option on XYZ Corp's stock struck at $100 with a binary payoff of $1000. Then, if at the future maturity date, the stock is trading at or above $100, $1000 is received. If its stock is trading below $100, nothing is received.

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Tag Archives: return

The Importance Of Managing Risk While Trading In Binary Options