5.4 Options

Instruments and Platforms

Let us look at Binary Options – A subsection of the full options contract.

The 1st question that you got to ask yourself when you trade binary option is has the price of the instrument gone over a certain price over a define time period. The few things to note are:

  1. Trade price – In the options video, we spoke about the trade price being a certain percentage of the strike price and the strike price being the price of the underlying instrument.

  2. Expiration price – Expiration price at the point when you are choosing to sell the options contract as you are not obliged to.

  3. Difference – the difference between the trade price and expiration price. For example, the trade price that you bought at was basically $60 and the expiration price that you sold it was $100 and naturally the difference is $40 of profit.

That is the main thing about binary options but of cos the terminologies that we learn in the options contract of known price, strike price and known asset is all also used here in Binary options. The only difference is the way Binary options are traded. The price that you need to ask yourself is totally in a different concept.

Let us move on to the live examples.

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