Call and Put Options
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In today’s market, there are two types of traders; those who invest when the market is moving up, and those who invest whenever they want, whether the market is moving up or down. The most successful traders in the market belong to the second category. Binary options trading using Call and Put Options makes it very easy for traders to make money in the financial markets. Read on to learn more.
Call Options
Options are contracts between two parties for one to sell or buy a specified quantity of a certain asset, for an agreed amount (strike price), at a future date (expiration date). The person who pays the premium gets the right to buy or sell the asset, but is not required to do so. There are two types of options; calls and puts. A call option is normally used by traders who think that the price of an asset is going to increase within a given period. In binary options trading, traders who buy call options get the specified profit if the price of the asset moves up by at least one point before expiration date.
Put Options
Like call options, put options also have the three elements, strike price, expiration date and premium. The premium is simply the cost of the option. Traders normally buy put options when they think that prices are likely to reduce in the near future. Open positions or contracts that expire “in-the-money”, at least one point below the strike price, lead to huge profits. Many traders nowadays offer profits of around 85 percent of the amount invested. Losses range from 86 to 90%. These rates differ from broker to broker, so traders need to find a brokerage firm that offers the best terms.
Finding a Binary Options Broker
When looking for a binary options broker, there are four important things that traders need to look at. These are:
– Profit and Loss: The difference between profit and loss matters a lot. For instance, if a broker offers 80% rate of return and 98% loss, you may want to consider looking elsewhere. The ideal broker should offer a very small difference between the two rates. An 80% return on investment and 85% loss is reasonable.
– Minimum Deposit: Not all traders have thousands of dollars to invest, so the ideal broker should accept low deposits. However, traders should be willing to make an initial investment of around $200.
– Compliance: There are many scams out there, so traders should only work with reputable brokerage firms that are certified, licensed and regulated by relevant authorities.
– Available Assets: One of the main advantages of binary options trading is that traders are exposed to thousands of international assets. Therefore, traders should only sign up with firms that offer the widest range of financial assets.
Successful binary options trading is achieved with the help of technical analysis tools such as signals, moving averages and charts among other types of indicators. These tools can help you to make the right decision on when to use Call and Put Options.
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