Most traded binary options are a result of events :
* Advantages and disadvantages
When it comes to evaluating the option of using the traditional model of the Black-Scholes. Binary options is not so easy to quantify. This can be both an advantage and disadvantage, such mispricing can work for or against the investor.
Another dilemma is market ability and liquidity risk of binary options. While some binary options have a relatively active markets, the other primarily rarely traded over-the-counter. Even as a purely bilateral contracts without liquidity.
In conclusion, binary options have unique features that make them suitable for active investors, and special situations. Difficulty of evaluating these derivatives could provide an excellent opportunity for arbitrage. There are many exotic options, and if you learn to use them you can earn money with binary option.
What is binary options?
Profit from the binary options has been fixed in advance and paid only if the price of the underlying asset meet predefined requirements. For example: the condition may state that the holder of the binary options on shares of "X" company will receive $ 50 if the share price exceeds 30 dollars on the due date of the option. At the time of purchase of the binary option the share price of "X" company is 26 dollars
How much can I earn from binary options
Investor can (sell) options on assets that actually holds in its portfolio in order to earn more money. For example, the said investor owns 1,000 shares of "X" company, which on June 10, 2010 bought for 8.20 dollars each. The same investor may decide to sell 10 call options with striking price 9.80 dollars. If the option is not exercised, the investor has earned premium for the options received. If, for example, August 10, 2010 the Company's shares are traded on the 10.45 dollar price, the option will be exercised and the investor will have to sell his 1000 shares at 9.80 dollars per loss. But he will also win U.S. $ 1.60 per share, since it was purchased for 8.20 dollars, and sell them for 9.80 dollars. Furthermore, the premium received. If "X" company has paid dividends before the option exercise, the investor has received them as well. From this example we can conclude that the issuance of covered options strategy is not linked to particular risk, but can lead to significant increases of profit to the investor
In recent years the markets for binary options is ever increasing due to high profits and low risk!
* Binary options offered on exchanges are standardized contracts valid, underlying and strike price, and traded actively. Their prices are quoted daily. Becausebinary optionsare extremely valued by investors, they continually innovate.