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Binary options – originating in the institutional trading

Binary options – originating in the institutional trading

Digital or binary options have their roots in the classic options that are traded for centuries. With its simple and clear structure binary options may be classified as “exotic” which until recently was only the distinct expert possible, but are much easier to trade.

Binary Lens4With a traditional option the right to vote is obliged to purchase an underlying asset at a later date and at the previously agreed price or to sell. For this right, a fee is due, the option can be used or expire Go For example, assume that gold will have a significantly higher rate in three weeks, you acquire an option to approximate current price, so a call option.

If the rise in price of gold, you can buy at the specified time-effective. Conversely, you open a Put option if you come from falling prices. Then sell in three weeks at today’s price and emphasize the difference as a profit. However, as the price development is imponderable, you can not calculate a priori your profit – as opposed to binary options.

Classic options – long history

Binary options – originating in the institutional trading binary options are not based on the purchase or sale of the underlying assets themselves, but only on the prediction of future performance. By 2008, it was reserved for institutional investors, such as banks, subject to trade binary options and take advantage of the high profit margins.

The Chicago Board of Exchange has finally opened the trading of individuals, so that even online brokers could gradually establish itself in the European market. Since this works over the counter trading, the parties are not covered although the banking supervision, but strict regulation provisions have been adopted by the relevant financial authorities. In particular, the simple structure of the binary options in which to be achieved profit margin as it is established as the maximum loss, this financial instrument sets itself apart from the ever more complex derivatives market.

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Technical requirements were necessary

Options-courses-morgenUm options to act digitally, the development of stable and fast Internet connections was necessary to make the exchange of large amounts of information accurately possible. The prices move constantly, so delays may result in losses.

Since then, private users have technically reliable access to online platforms and data can be transmitted securely encrypted , the conditions for trading are given binary options . You can follow the current market with high quality live charts and intelligent tools , analyze and generate important trading signals , which until recently was only the distinct expert possible . Thus, binary options are also suitable for hedging , thus securing , other investments – such as classic options.