What Are Binary Options

Trading binary options is one of the most effective and rewarding ways to get a high rate of return on a financial investment in a very short period of time. Instead of actually purchasing an asset itself, a binary option allows the investor to predict which direction the value of the asset will move in by a set time. When a buyer, known as an investor, chooses to purchase a binary option through our platform, uTrader creates a contract that allows the investor to purchase an underlying asset at a fixed price and within a certain time period from uTrader, known as the seller.

Binary option investments have only two possible outcomes and before purchasing any option, the investor is aware of both. This is why binary options are commonly called Fixed Return Options (FROs), digital options or all-or-nothing options. These names demonstrate the inherent 0-1 characteristics of this type of option.

Here is an example of what a uTrader binary option might look like:

An investor wants to purchase an oil binary option for $100 and believes that during a fixed amount of time the price of oil shares will increase from where it was at the time of purchase. If the investor’s prediction is correct then uTrader offers an 80% return on the investment.

The possible outcomes of this binary option are:

1- If the price of oil shares is higher at the end of the 5 hours, then the investor will receive a $180 payout from uTrader.

0- If the price of oil shares is lower at the end of the time period, then the investor will not receive any money.

Why are binary options unique?

There are 3 aspects that set binary options apart from regular options often called vanilla option:

Regular/Vanilla Options

Binary Options

Expiry Time

Expires monthly or quarterly

Expires in an hour, day, week or month

Payout

Dependent on the amount of change in price for the asset

Fixed at the time of the purchase

In the Money: 70%

Out of the money: 0%

Execution

At any time before the expiry time

Can’t be executed before the expiry time

It is important to understand how these difference effect your investment:

First, binary options expire at the end of an hour, a day, a week or a month so profits are made almost instantly as opposed to other options which might not expire for several months or longer.

Secondly, binary options come with a managed risk because of the predetermined fixed payout rate. However, the payouts for other types of options depend on the extent of the price change of the asset.

Third, once a binary option is purchased you are committed to it until it expires unlike other options which can be bought and sold any time before the expiry date.

If you are looking for an interesting and highly profitable way to trade stock online, then uTrader is the right place for you and binary options are an excellent way to invest your money. Trading on our platform is simple and fast plus we offer online customer support to assist you with any problems you may encounter.