Binary Put Option Explained

Binary options put and call. Basics of Put or Call Binary Options Trading

Depending on the return offered for the contract, the trader makes an appropriate profit. The contract has an expiry time of 10 minute expiry.

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  • Exotic Options which pays a fixed return when it finishes in the money upon expiration.

If EURUSD does trade lower than the price at which the option contract was entered, the option is deemed to have expired in the money and the trader therefore makes a profit.

However, if EURUSD trades higher than the price at which the option contract was entered, then the option would expire out of the money, with the trader losing their invested amount.

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  2. Article Reviewed on December 23, Michael J Boyle Updated December 23, The most common definition found for an option is that it is an investment instrument generally a contract in which a trader purchases the option to buy or sell the underlying asset.
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Trading an Option with Buy-Back or Early Close Some binary options brokers offer an early close or a buy back feature. This is available on selected instruments and allows a binary options trader to close their contract before expiry.

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This can be used to minimize the losses. For example, if you placed a CALL option and the instrument started to trend lower, then the trader can close the option contract before expiry.

What is call and put in binary options trading

This prevents the trader from losing their entire invested amount and settle for a smaller loss. The above image depicts a PUT option that was entered at a strike price of 1.

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The buy binary options put and call or early close option is therefore a valuable additional risk management tool that can be used by the trader. The feature will not be available 10 minutes ahead of the contract expiry time.

Binary Option Example

So traders should take note of this. Your risk or losing amount is always the amount that you invested.

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The reward the amount you can profit is the percentage specified for the option. To conclude, binary option is very simple and easy to trade.

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With clear risks and rewards specified even before you enter a contract, a trader is quite in control of their trades. Also by additionally using the buy-back or early close feature, a binary options trader can be able to control their risks even better.

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Interested to know where to trade binary options? Click here for a review of the binary options brokers Rate this post: 7 votes, average: 4.

Regulation and fraud[ edit ] Further information: Securities fraud Many binary option "brokers" have been exposed as fraudulent operations. Manipulation of price data to cause customers to lose is common. Withdrawals are regularly stalled or refused by such operations; if a client has good reason to expect a payment, the operator will simply stop taking their phone calls. Provincial regulators have proposed a complete ban on all binary options trading include a ban on online advertising for binary options trading sites.