Binary options for dummies

This is a discussion on Binary options for dummies within the Fixed Odds & Binary Betting forums, part of the Markets category; Personally I think binary options represent stunningly bad value for money and you have to have a serious edge to ...

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Old Apr 4, 2011, 4:35pm   #8
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Re: Binary options for dummies

Personally I think binary options represent stunningly bad value for money and you have to have a serious edge to overcome the spreads.

As an example pick an instrument, get a quote for expiry >= x and < x. Without spreads you should break even with these bets no matter the outcome, if you size them appropriately. Try it - you'll find you can't get better than a 25% loss of capital in many cases. 25% spread is simply daylight robbery.

Outside of a dog, a book is a man's best friend,
inside of a dog, it's too dark to read. -- G Marx.
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Old Apr 7, 2011, 8:21am   #9
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Re: Binary options for dummies

i trade binary options sometimes, but i prefer pair options. They are a similar product - but pair options are newer and more advanced.

The only pair options trading platform i know at the moment is

I've traded with them a few times, and they seem like an honest pair options broker
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Old Apr 13, 2011, 7:15am   #10
Joined Mar 2011
Re: Binary options for dummies

I traded the Shell/BP Floating Pair Option on Monday with an end of day expiry time.

I received $114 on my investment when my Pair Option expired in the money. I'm not complaining. I am happy with my decision to trade with Pair Options, because I can choose my risks and rewards with a variety of different return percentages for different stock pairs.

Also, I prefer to stick with industries I know, which is one of the reasons I chose to trade the Shell/BP stock pair.

Regarding They have given me good quality customer service with quick withdrawals and deposits since I opened a trading account with them.
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Old May 13, 2011, 2:11am   #11
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Joined May 2011
Re: Binary options for dummies

Binary Options are a very good way to make fast money; however, you have to know who you're dealing with, or else you can risk losing a lot of money. Banc De Binary came through for me as the 5th platform i've tried. Supprisingly enough; i found a rich asset list, great payoff's, responsive site with great customer and technical support round the clock.

But, let's face it. A fast website and nice people aren't enough to make a successful brokership. Banc De Binary have specialist brokers and analysts that eat, breathe and live Digital Options. This allows the bank to guide you on how to make the best investments with your money.

Like i mentioned earlier; i've been around the platform sites, and i've stuck with for almost a year now. I've enjoyed fast withdrawals, and rumor has it that BDB is even coming out with international credit cards!
I wonder what they'll think of next :-)
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Old May 13, 2011, 4:29am   #12
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Re: Binary options for dummies

Im a newbie in binary option trading, but previuosly I have experience trading in forex,
I dont I can apply forex trading system and entry into binary option trading. Anyone has suggestion
how to have proper strategy to trade with binary.. thanks
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Old May 16, 2011, 9:29am   #13
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Re: Binary options for dummies

Last month, I got introduced to binary option trading by a friend who knew I wanted to get into trading and knew absolutely nothing about it. I checked out several sites and got into and was happy at how easy it was to use their practice account. A very kind, patient and knowledgeable account manager called me up and educated me about how it works and how I can maximize my earning and trading. She even gave me a 30% bonus for the initial $500 deposit I placed. Although I lost in some trades, overall I was able to gain and even referred friends to try out their platforms, because they also give you the freedom to choose where you want to invest your money.

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Old Nov 16, 2011, 10:58am   #14
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Re: Binary options for dummies

Originally Posted by Iceberglettuce View Post
Binary options are good for beginners that want to get their feet wet, without worrying too much about all the jargon used in trading stocks. With binary options you either win or lose Ė there is no in between. The basic concept is that you buy a contract, either in the buy or sell mode and if the stock does as you predict you will receive money and if you were wrong, you lose it all.

Of course, this can still be quite confusing. Binary options are not available with each and every stock out there. A matter of fact, it can be hard to find the ones that offer this option.

The CBOE lists two stocks with binary options - VIX and SPX. The American Stock Exchange lists stocks with binary option as FRO and include Apple, Inc (AAPL), Cisco Systems, Inc (CSCO), Citigroup Inc (C), DIAMONDS (DIA), General Electric (GE), Goldman Sachs (GS), Google Inc CL.A (GOOG), Home Depot (HD), IBM (IBM), Intel (INTC), iShares MSCI Emerging Markets (EEM), iShares Russell 2000 Index Fund (IWM), JP Morgan Chase (JPM), Microsoft CORP (MSFT), Oil Service HOLDRS (OIH), PowerShares QQQ (QQQQ), SPDR S&P 500 (SPY), Select Sector SPDR-Energy (XLE), Select Sector SPDR-Financial (XLF) and Wachovia Corp (WB). Every stock exchange has their own binary options, so you will have to learn which ones are available with this type of option or listed as FROís.

Now, to explain the concept. Binary options give investors a wide variety of trading options in that some are short-term trades while others may be quarterly since they are based on the date of expiration. You as a binary option trader will choose the stock that you wish to buy or sell by if you believe the price will go up or down on the date of expiration. If you think the market price is going to be higher then you buy. If you believe the market price will go down then you sell. If you choose correctly, then you receive payoff on each contract you had on that stock.

Normally, the price you will receive is a fixed amount, such as $100. This means you will receive $100 for each correct contract. If you buy and spend $25 and the stock rises or are equal to the strike price on expiration, you will receive $100 for each contract. However, if you are not correct you will lose your investment all together.

Metals and energy can also be bought and sold with binary options and be watched through the New York Mercantile Exchange. With the economy the way it has been heading, many investors are buying and selling foreign currency with the hopes of making a quick buck while others are looking to natural gas or crude oil.

Example of buying a stock with binary options

Light Sweet Crude Oil (CL)
The strike price for buying (calls) is at 20000
The strike price for selling (puts) is at 8000

Looking at the market and the strike prices you can make an educated decision in which way you believe the stock will go. Letís say you buy. The last strike price for calls was at 15000 and now it is at 20000. When you buy in you are saying the price of light sweet crude oil will be at 2000 or more on the date of expiration. If you are correct, you will then receive the set amount of money, usually $100, per contract.

Example of selling a stock with binary options

If you put on light sweet crude oil, believing the strike price of 8000 will be that or less then you will receive $100 per contract if the set amount is such.

However, in both scenarios if you are incorrect and the strike price goes down with a call or up with a put then you will lose all money invested.

Example of buying or selling a stock with binary options long term

You can also call and put with stocks that do not have an expiration, except quarterly. This allows you a few more options. You can always change your mind, however, you will only receive the money you put into the stock.

If you have a contract for Gold in the amount of $80 but now you do not believe the price will be the same or more, you have the option of selling. Of course, you will sell at a loss, but you will not lose your entire $80.

However, if you leave it the same and you were correct in your speculation, you will receive the set amount of money per contract.

You need to watch the binary option price the stock is selling at. This can be a great way to make an educated decision if the stock with rise or plummet on the expiration dates.

Trade in Groups ó Donít Trade Alone
Great post, thank you for taking the time out to explain.
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