Binary options, also known as digital options, are a derivative trading instrument that first emerged in the financial markets in 2008. They are a form of exotic options, which offer traders a fixed payoff if the underlying asset meets certain predetermined conditions before expiration.
The underlying asset can be anything from stocks, commodities, currencies to indices. Unlike traditional options, where the payoff is based on the difference between the strike price and the price of the underlying asset, binary options offer traders a binary outcome, either a fixed payout or nothing at all.
Binary options trading is popular among traders who are looking for a simple and fast-paced form of trading that offers high returns with low risk. It is also popular with novice traders who are attracted to the simplicity of the trading process.
The appeal of binary options lies in their simplicity. To make a trade, a trader has to choose an underlying asset, an expiration time, and a strike price. A trader can then choose to buy a call option if he/she thinks the price of the underlying asset will go up, or a put option if he/she thinks the price will go down. If the trader's prediction turns out to be correct at the time of expiration, the trader receives a fixed payout.
Binary options brokers offer various types of binary options, including One-Touch, No-Touch, Range, and Turbo options. One-Touch options offer a higher payout if the underlying asset reaches a predetermined price level during the term of the option. No-Touch options pay out if the underlying asset doesn't touch the predetermined price level during the term of the option. Range options pay out a fixed amount if the underlying asset stays within a predetermined range during the term of the option. Turbo options have a shorter expiration time, usually ranging from 30 seconds to five minutes.
The risks associated with binary options trading are high, as the trader's losses are limited to the cost of the trade, while the potential gains can be significant. As a result, binary options
trading is often associated with gambling and speculation. In fact, binary options trading is banned in several countries, including the European Union.
Furthermore, binary options trading is often associated with fraudulent activities, as scam brokers lure traders with false promises of high returns and use fraudulent practices to steal their money. Traders are advised to conduct thorough research before choosing a binary options broker and to avoid brokers with poor reviews and a history of fraudulent activities.
In conclusion, binary options are a form of exotic options that offer traders a fixed payoff if the underlying asset meets certain predetermined conditions before expiration. Binary options trading is popular among traders who are looking for a simple and fast-paced form of trading that offers high returns with low risk. However, binary options trading is often associated with gambling, speculation, and fraudulent activities, and traders are advised to conduct thorough research before engaging in binary options trading.