What are Binary Options?
Binary option is a financial instrument that creates a contract between two parties for asset transactions where the future return on investment is a fixed amount known in advance.
What is the return on investment for Binary Options trading?
When options expire ‘In the Money’, a trader’s return can reach up to 85%, depending on the rate of the particular asset and the market volatility. However, traders know the amount before entering the position which allows them to reach high-quality portfolio management. For example, a trader invests $1,000 in binary options with a ROI of 85%. If the option expires ‘In the Money’, the trader gets a return of $1,850. If the Option expires ‘Out of the Money’, the trader loses the amount invested.
What is an Underlying Asset?
UltimatepayOption allows traders to buy or sell a wide variety of currently internationally traded financial assets – including currencies, stocks, commodities and indices. See Asset Table for full details.
What Instrument Types are being offered?
– One Touch
For a full explanation of how these instruments work, see the page for Trader Basics.
What is the Target Price?
UltimatepayOption determines the target price (Purchase or Strike price) from a set of live pricing feeds that the data provider supplies. The price represents the amount at which we are willing to sell each particular option. You can buy an option on any side of the target price according to the direction you consider the price of an asset will move.
What is the Expiry Time?
Expiration time basically determines how long after you’ve placed the trade, you’ll learn the outcome of your trade. When the option expires, the trading platform will assess the value of the asset and determine whether your position is in or out of the money. The option’s expiry time is always clearly displayed on the trading platform next to the option.
Can I close an option before the Expiry Time?
Yes, purchased options can be closed before their expiry time until the ‘No More Trades’ time. However, it comes with a limited time window — within a few minutes from the time of purchase. (Note: Close functionality is not active for all options or at all times). The broker adjusts the amount of profit based on the market price of the asset when the trader closes the position. The trading will also display this amount.
What is the Expiry Level?
UltimatepayOption calculates the expiry level based on a real market bid, ask and last prices that the data provider supplies by the time of the option expiry. The expiry level determines whether the option has expired ‘In the Money’ or ‘Out of the Money’. The calculation formulas are explained in the Expiry Calculation section.
When is ‘In the Money’ and ‘Out of the Money’ expiries?
When an option expires ‘In the Money’ the option is fulfilled as the trader’s estimate was correct. Here are some examples of options that expire ‘In the Money’:
– A High/Low instrument where a low option expires below the target price or a high option expires above the target price.
– A One Touch instrument where a touch option expires due to reaching the target price or a no-touch option where the target price is not reached before the expiry time.
– A Boundary instrument where an outbound option expires below the lower target price or above the upper target price or an inbound option expires between the target prices.
When an option expires ‘Out of the Money’ the option is not fulfilled as the trader did not successfully predict the outcome, therefore the investment is forfeited.
What happens when an option expires at the Target Price?
The trader can choose either the option will expire above or below the target price. If the target price is reached by the asset at an expiry time, for both sides of the contract the result is considered a ‘Push’. In this case, 100% of the principal investment is returned to the trader. This occurs only with the High/Low option and is called ‘At the Money’.
What is an Investment Amount?
This is the amount of money that a trader invests and it is the basis which determines the option’s profit or loss. If the trader is correct in his projection and the return is 85% on the option, he receives 85% of the investment amount as a return.
What is the Minimum Investment Amount Possible?
$25 is the minimum investment amount for a single option.
What is the Maximum Investment Amount Possible?
$10,000 is the maximum investment amount for an option.
What Is The Maximum Amount Of Options That Can Be Purchased Simultaneously?
A trader can enter an unlimited amount of options at any given time. The total amount of money placed at the same time across the options cannot exceed the maximum investment amount of $10,000 until one or more options have reached expiry. After the total amount of pending options has gone below $10,000, additional options can be entered until the maximum limit has been reached again.