I read a story a while back where a man decided to sell all of his assets including his house, car, and other investments to gamble on one spin of roulette. Roulette is a casino game where you can bet on red or black and if the ball lands on your color, you double your money. It is close to a 50/50 gamble with slight odds to the house as บาคาร่า there are a few chances for the ball to land on green. This man liquidated all of his assets and placed a $130,000 bet on red…and it landed on red. He cashed out and walked away 100% richer. Binary option trading is much the same, but with an advantage to the gambler or in this case investor.
Binary trading options, also referred to as “all or nothing options”, is just like playing roulette, but now you may be able to predict with great confidence the outcome before placing your bet. Instead of the Roulette’s red or black, you are betting on if a stock or currency’s value will go up or down. I guess you could still call that red (loss) and black (gain).
For example, if you purchased a binary trading call option on ABC Inc., all you need to do to practically double your money is to see ABC’s stock price go up, even if it’s only a cent. If you wagered $100 that the stock price would go up, you will have profited almost 100%, but if you had purchased that same stock and the price went up a cent, you would only have profited 0.0001%. You can also purchase binary trading put options where you wager that the value of a security will go down. In our example, the same bet can be made and if the price of the stock drops by even a cent, you again make your near 100% profit.
There are also binary option trades that payout a fixed amount, if the value of a security reaches a certain threshold. So if an ABC Inc’s binary call option was purchased with a strike price of $75 and that stock reaches $75 before a set deadline then you are paid out a cash bonus. These cash or nothing options could payout $1000 or much higher than 100% of your investment. It’s just a riskier bet than black (up) or red (down).
It’s obvious that there is a lot of money to be made in a short time investing in this fashion. Call it legal roulette, but with better odds. Imagine if you would have kept betting that British Petroleum’s stock prices would keep going down during the spring and summer of 2010. Due to the Gulf Oil crisis, you would be rich. Doing some research on the companies or currencies you are purchasing call or put binary options on can give you the edge you need to wager in the right direction. You don’t have that with the randomness of roulette.