- May 3, 2016
- Posted by: Michael
- Category: Binary options guide
The basic type of binary options, High/low options have a very easy principle, which can anyone very quickly understand. The only task you have got is to predict whether the price of a certain underlying asset will be lower or higher at the time of expiration. If we demonstrate it on an example, it may look as follows. I buy high option of the currency pair EUR/USD (therefore I am choosing upwards direction) at the current price 1.24231. And I assume that the value of this option will be after 30 minutes and 13 seconds higher than it is now. In case that the value shifts even only at 1.24232, my trade will be successful and I earn fixed amount (70-85%). Otherwise, I lose the amount I have invested in this particular trade. High / Low options are the most popular types of options due to their simplicity and level of risk.
- Known also under following names: Call/Put, Up/Down
- Payouts: 70-85%
- Risk: The lowest (in comparison to other types of options)
Touch / No Touch
When we trade Touch options we predict, whether the price of an option will touch, or won‘t touch specific boundary within a certain time. Touch options also offer two directions – Up and Down. If we choose Upwards direction, we predict that the value of the option gets over the upper border (or at least touches it). In case we choose a downward direction, we conversely predict that the price will get under the bottom limit border. The advantage of trading touch options is that if the value of the option gets at least once over/under the border, the trade will automatically close itself as a profitable investment, and you do not have to wait until the end of the expiration date.
When we trade No touch options, we will be again given two choices to pick from (Up and down). In case we select Upwards direction, we predict that the price won’t get over the upper band. Conversely, if we choose Downwards direction, we predict that the price won’t get under the lower band. No touch options don’t offer premature termination unless your trade ends out of the money. That happens in case we have chosen downward direction and the price crossed under the bottom band, or conversely if we have chosen upwards direction and the option crossed the upper band.
- Known also under following names: Touch / No Touch, Above / Below
- Payouts: 70%
- Risk: High
One touch options are almost the same type as the touch/no touch options, the only difference is just that the lower and the upper limit is at One Touch options very far from the actual price of the underlying asset. Payouts from trading one touch options are very high, you can get up to 550% of the investment you put into the trade. However their trading is very risky, because of one simple reason, the boundaries are way too far from the actual value of the option.
- Payouts: 250%-550%
- Risk: Very high
60 second options
It is the same kind of binary options as High/Low options. The only difference that 60-second options offer is that we know their outcome in 1, 2 or 5 minutes since buying/selling the option. This is the fastest way how you can trade binary options, however, they are riskier than classic high/low options, because it’s harder to determine the direction in such a short time.