Binary Options – The Newest Trend in Trading Tools

Stock options have been one of the most profound conceptions in the stock market. In recent years however, a new type of options has started to gain popularity: the Binary Options.

After the massive rise in the popularity of the Forex market, hundreds of websites and companies have started offering Forex services, with the internet being flooded with advertisements and seemingly enticing Forex offers. Now, it would appear that the same thing is happening with the Binary Options market.

So what makes these options so enticing over regular stock options? Well, in one word – simplicity.
Many people consider Binary Options to be a game of chance. While that may be the case for those who do not know anything about the stock market, this is hardly the case for experienced stock market traders. In fact, the same has also been said about general trading in the stock market.

So what are these binary options anyway? The term binary basically means 2. In computer logic, binary code means that all the information is composed of either 0s or 1s, 0 meaning no, and one meaning yes. This is basic binary logic. The same can be said for this new trading tool.

With these new options, you basically make a prediction of whether or not a certain stock, index or currency is going to be above or below a certain price point at a certain time, and the outcome is either yes or no. With normal stock options your winnings are determined by how much “into the money” you are with your prediction, meaning that if for example you predict an underlying stock price to be $50, the higher above $50 the stock reaches, the more valuable your option becomes.

With Binary options, this is not the case. If your prediction ends up “in the money”, it doesn’t matter if the price is $50 or $250, your winnings will still be exactly the same.

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