Binary option is the latest sensation in the world of investment trading. With a maximum profit percentage hovering around 90%, it is a fixed return investment policy. Binary Option are fixed return policies since it has only two possible outcomes. It doesn’t involve owning real assets. You have to invest in underlying assets. You will own a contract with a certain expiry date set by you. This contract cannot be sold.
In this kind of investment trading you will have to predict the rise or fall in the price of the underlying asset in which you have invested. The underlying asset can be anything ranging from gold silver to currencies to stocks and shares. You do not own the real asset in this kind of investment, but rather you invest in the performance of the investment.
For example you have invested in the shares of Microsoft. You have bought the contract with 500$ at 80% profit. Suppose the cost of shares at that moment was 10,000$. You put a call option (expecting a rise in price) on 11,000$. If at the end of the contract the price of shares exceeds 11,000$ then you gain 900$. If the price falls below 11,000$ then you lose your money. Some broker firms offer you 15% cash back upon loosing.
It is known as binary options since it has only two possible outcomes. You just need to predict the direction of price change- you either invest in call option which is rise in price, or the put option, which is lowering of price.
Binary options trading might be considered as gambling by many, but it is quite profitable and has more assured return than other investment policies. Also you can make quick money using this trading policy. Just make sure you invest wisely.