Binary Tradings

An option is basically a contract drawn between a buyer and a seller. The contract allows the buyer to buy an underlying asset and a seller has the right to sell it. There is no obligation of buying or selling for either party involved. If there is rise in the price of the share during the time of the contract, the buyer gets back the investment along with the profit. If there is any fall in the price, the buyer gets nothing (except a 15% return on the investment, in case of binary tradings). This is the basic principle behind any options trading.

The two main models of binary options are the cash-or-nothing and the asset-or-nothing binary options. The underlying asset plays an important role in either of the models. These are the basic foundations on which the various options are drawn on.

There are four major types of binary options assets. These are defined in an easy to understand manner for reference: 

• Forex Options: This type of binary option assets involves trading currency in foreign exchange market. Similar to stock trading, the Forex options also ensure a high rate of profit. The traders make an agreement on the value of a currency type. In case the price increases, they get the investment amount along with the profit earned. The buyer has to pay a premium to the seller to avail this benefit in Forex options trading. 
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• Index Options: The contract in the index options is based on the security of stock index. The rise and fall in the market value of the index is relative to the value of the index. The equity market is related to the put and call of an index. In index options trading, the increase in the price of the index results in the increase of the call for the buyer.
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• Stock Options: This type of options allows the buyer to buy or sell specific assets within a time limit. The seller agrees to allow the buyer to buy the stocks for a payment. The stocks then are sold at an agreed price. Binary stock options trading can be done in future or options exchanges. 
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• Commodity Options: This type of options allows the traders to gain huge profit by investing in commodities trading. One can invest in the hard (metals like gold, silver, platinum) or soft (Gas & oil) commodity trading. It has lower risk in comparison to other type of assets trading. For detailed information on each type of the assets mentioned here, you can refer to the individual sections. 
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