Binary options vs fix expirytime options on Binomo
Binomo is one of the most popular online options brokers. Millions of traders from all over the world are using their service on a daily basis. Interestingly, Binomo achieved such success in a relatively short period of time. But how did they do it?
There can’t be just one reason for such enormous success. However, one of the main reasons could be their futuristic view on options trading and the constant introduction of new tools. Binomo continuously adding new features and trading instruments, for example, the most recent addition was digital options.
In this article, we will compare two financial instruments offered on the Binomo platform. Mainly we will dive deep into understanding the difference between binary and digital options.
Understanding what is an “option”
An option is a derivative, which is a type of financial security. It called a derivative because the value is derived from a group or one underlying asset. When you either buy or sell an option, you are not becoming an owner of the underlying asset.
For example, if you purchase an option for Gold, you will not become a physical or a digital owner of Gold. But what actually happens, is that you are speculating whether the price of Gold will rise or fall within a specified timeframe. The end of a specified timeframe is called “Expiry Time” and after trade expires, you either make a profit or a loss.
When trading options, profit is calculated based on the percentage of your investment. The maximum potential loss can not exceed the size of the trade. Some brokers allow exiting the trade prior to the expiry time. Binomo is only in the process of integrating such a feature.
Binomo expiry time and profitability
The most common type of option is high-low. This type of option is designed for those traders who chose to predict whether the price will go up or down over the chosen amount of time. The trade entry point is marked as a strike price.
If you expect the option to expire higher than the strike price, enter a CALL option. On the other hand, if you expect the option to expire lower than the strike price, enter a PUT option. The trade expiry times are predetermined on the Binomo platform and can range from 1 minute up to 1 hour.
Along with the fixed expiry times, Binomo also has a fixed return on investment. Profitability depends on the asset you trade and the length of the expiry time. Please note, that the maximum payout can be as high as 90% in case of correct forecast (successful trading) on a VIP trading account.
Binomo is focusing on a medium to short term investment, that can last from 1m up to 60m. Profitability depends on the asset traded and the time length till option expiry. Perhaps it is best to choose those options which offer higher profitability and use an appropriate trading strategy depending on the expiry time.
We are sorry that this post was not useful for you!
Let us improve this post!
Tell us how we can improve this post?
Download this article as PDF. (English)Enter your Email Address