Binary options are new way of trading in the stock markets. They have become popular among investors because of their simplicity and easy method to start with. It is true that these options are simple to understand but for those who are new to options trading, must have the knowledge about traditional trading.


In traditional trading, investor’s profit is the difference between the buying price and selling price of the asset but binaries offer you fixed returns if certain conditions are met. Unlike traditional trading, you don’t have to buy or sell the stock but in binary options you are required to estimate the price of the underlying asset and if the estimation is correct, your trade is considered in the money and you get your fixed payout. The main feature of binary options is that they give very high returns and one can start with investing very minimal amount that can be as little as $50. So the maximum risk of the investor in binaries is the invested money because if there is a sudden change in the market’s trend, the result of the binary options is not influenced as it is in traditional trading.


In order to trade binary options you have to choose between a call and a put option. Call option is bought when there is a chance for the price of the asset to rise, and on the other hand if there is a chance for the price to go down than its current price in future, investors buy put option. If the trade is in favour of the investor, he may get 65% to 81% profit on his investment as decided between the seller and the buyer at the time of the contract.