Binary options pay out depending on the outcome of a simple "yes or no" proposition, making them clear-cut yet flexible trading tools.
Key Takeaways Binaries can be used to make directional bets, but also can be used to profit from sideways markets or to trade volatility. Because they are all-or-nothing binary options bear little resemblance to traditional options, featuring different payouts, fees, and risks, as well as a unique liquidity structure and investment process.
What is the best strategy for trading flat markets? What is a call spread straddle strategy? What is a strangle strategy using binary options? Strangle strategies for trading binary options are perfect for moving markets.
If the binary expired at the strike of With binary options, you can buy or sell market direction using strikes which are out of the moneyi. There is no cap to profit potential when trading the underlying market but the binary choice offers a comfortable way to participate with limited risk and potential positive return.
The Bottom Line Traders can take advantage of binary options through numerous strategies on the Nadex exchange. Nadex is a fully regulated US exchange offering contracts on currency pairs, equity indicesenergy, metals, agricultural and events.
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The Bottom Line Binary options are financial options that come with one of two payoff options: a fixed amount or nothing at all. That's why they're called binary options—because there is no other settlement possible. The premise behind a binary option is a simple yes or no proposition: Will an underlying asset be above a certain price at a certain time? Traders place trades based on whether they believe the answer is yes or no, making it one of the simplest financial assets to trade.
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