Once one has fully grasped the way a binary option functions, it’s time to decide what type of binary option one would like to invest in.
Of course, the first thing to do is choose a binary options platform. If you already know which type of binary option you want to invest in, it’s important to make sure the platform you choose offers a full section of expiry times and underlying assets for this type of binary option. (For more information on which binary options platform is right for you, click here.)
Once you’ve selected the company, website and platform that you would like to trade with, it’s time to decide which type of binary option you could like to begin investing in.
Here’s a brief description of the most prevalent and common type of binary option, the Up/Down binary option:
Up/Down Option
The Up or Down or High/Low binary option is by far the most prevalent type of binary option offered for purchase by retail options brokers online.
How it works:
The High/Low or Up/Down binary option essentially offers traders the opportunity to invest in whether the price of a share of stock, a stock index average, the value of a commodity or a foreign currency exchange rate pair will go Up or Down in a predetermined period of time.
In order to invest in this type of binary options contract, you must:
Select an underlying asset from the list of commodities, stocks, stock indices and forex pairs
Select an expiry time for the contract which can be from as little as 15 minutes from time of purchase to as long as a few days.
Decide whether you believe the value of the underlying asset you have chose will go UP or DOWN by the expiry time you have chosen.
Decide how much you would like to invest and execute your trade.
It’s that simple.
This type of binary option is by far the most popular since it presents a somewhat simplified version of financial investing which basically comes down to: Will this asset increase or decrease in value in the next half an hour or the next day?
Expiry times
Most options brokers offer the most expansive selection of Up/Down option expiry times so once can often invest in one that expires in as little as 5 minutes time or up to a few days time from time of purchase.
Payout
The payout for High/Low binary options is usually from 70% to 85% depending on the underlying asset, the expiry time and the options broker or option trader you choose.
Insurance Rate
The rate of return on an unsuccessful investment can be 10 or up to 15% on your investment depending on which website you select to invest in binary options.