The Underlying Asset
Most binary option trading platforms offer binary options on a range of underlying assets, including stocks, commodities, currencies pairs and indices. As traders become more familiar with binary options, they tend to specialize in a specific underlying asset or area of the market.
The Binary Option Contract
Binary option contracts typically last anywhere from one hour to one month, but BinaTrades offers traders the ability to buy contracts that are even shorter term, down to five minutes before they expire. To make accurate predictions, it is important to know exactly how much time is left before an option expires
The Forecast or Prediction
The job of a trader or investor is to determine which direction the price of an underlying asset will move before its option’s time of expiration. Traders who believe that an asset price will rise should buy a Call option. Traders who believe that an asset price will fall should buy a Put option. Correct predictions can earn traders high returns that nearly double their investments.
BinaTrades offers four unique special features for Digital trading, a type of binary option, that gives traders the ability to more effectively manage their risk: Close Now, Extend, Double Up and Trade Insurance.
The Close Now ability enables traders to cancel a Digital option before the time of expiration. A trader does this when he believes that his option is not performing as he expected because the underlying asset he chose is not moving in the direction he predicted. For example, if a trader bought a one hour Call option and after 50 minutes he sees that the price of the underlying asset is beginning to fall after having risen for a while, he could ‘Close Now’ to insure that he makes a profit. On the other hand, if the price of the option has decreased steadily, he could ‘Close Now’ to cut his losses.
The Extend feature enables traders to extend the expiration date of an option so that they can give an option a greater chance to expire in-the-money. For example, if a trader purchased a one hour Put option and five minutes before the time of expiration the price of the underlying asset has still not decreased as anticipated, for a one time fee the trader could extend the time of expiration to give the option the opportunity to be in-the-money.
Double Up is a unique feature that allows clients to capitalize on a winning trade or potentially get a better strike price if a trade is losing. Put simply, Double Up will place an exact duplicate of your already open trade but at the current market price. For example say you bought a one hour Call option on gold for $10 with a strike price of $1250, and after 50 minutes the price had started to rise, you could double up which would place a duplicate of this already open trade but the strike price would be different. So now you would have a second call option on gold of $10 but at a strike price of say $1253 as the price has risen by $3.
Trade insurance is a unique feature that allows clients to reduce their risk by placing an insurance on the trade they execute. By selecting how much insurance cover you require on the drop down menu at the top right of the trading graph you can reduce your risk for a lower percentage of payout. The choices available are between 5% cover up to 20% cover. For example if you chose the 20% option and placed a trade of $100, should the trade expire out of the money you would receive 20% of your initial stake back. On the other hand if your trade expires in the money then your payout would be reduced as per the cover option you chose.