What Is 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 former pays off a fixed amount of cash if the option expires in-the-money while the latter pays off the value of the underlying asset.

How do binary options work in stock trading?

  1. Select the underlying asset you wish to trade (a stock, commodity, currency etc).
  2. Enter your investment amount. This is how much you’re willing to risk.
  3. Select ‘Call’ if you think the price will rise or ‘Put’ if you think the price will fall.
  4. Place the trade and wait for the expiry time to see if you’ve made a profit.

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