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The concept of trading binary options is quite straightforward. As a trader, you don’t have to make lots of choices. Your task as an options trader is to simply choose whether you are going to bet your funds on a Put Option or a Call Option. You will not even need brokers to engage in options trading.Call/Put options are in fact the simplest trading methods and are currently among the best route for starting your career in binary trading.
Benefits of Trading Options
Option trading is very different compared to the majority of other forms of market trading. That, however, doesn’t mean you cannot succeed or make money with trading options.
Binary option trading has many advantages. For one, in terms of the payout, there is no middle ground; you either profit or lose. One other appealing thing about this form of trading is that you will be very clear on what you stand to gain as well as what you stand to potentially lose, even before you have placed the trade.
Trading Call Options
Going for the Call Option implies that you are anticipating or predicting that before the trading expiration times arrives, the price of the asset will go up. After picking an asset, using the available tools and recent financial news, you’ve come to the conclusion that the price of that particular asset will go up, for instance, in the next hour. For such a case, you can proceed to place a trade and select the Call Option on that asset.
If the asset does indeed expire as per your prediction, you make an appropriate profit (or loss) depending on the margin offered by the contract.
Trading Put Options
A Put Option is purchased when you believe that the asset’s price will drop by the expiry of contract time. For example, after selecting your asset and analyzing the trend, you are convinced that within the next hour, the price will go down. In such a case, you may go ahead and place a trade, using the Put Option.
If, for example, you think that the asset is going to drop in value, you can then buy a Put Option. If it trades at a lower price than when you entered the option contract, you will make a profit. If, however, the asset trades higher, then you lose out on your invested amount.
One very important point to note is that your decision to either place a Put or Call Option should never be based on simple guesswork. It is vital to use the available tools, resources offered by your trading platform and financial news so that they may guide your selection.
When it comes to trading options, Call/Put Options are the most straightforward. This ideally makes them an ideal point of entry as it also facilitates trading directly with a trading platform without having to engage brokers. To make a profit, your underlying trade asset has to be below the strike price for a Put Option or above the strike price for a Call Option when they expire.