Binary option trading is such a recent invention in the markets, that many traders do not realize just how they could use it to good effect. In case you donâ€™t know, binary options get their name because the result is â€œbinaryâ€, simply yes or no. The option is either above or below the price of a financial security at the expiration date and time, and you either get paid or you donâ€™t.
If you have a binary call option and the price at expiration is more than your strike price, then you profit by a set amount, usually $100 or $1000 depending on the market and your initial investment. If the price is less, you get nothing, unless you trade with www.eztrader.com, in which case you are still left with 5%. You can also buy a binary put option, which works in the opposite way.
Because they are so simple, requiring only a sense of direction of the price, they are easy to trade and the risk/reward ratio is predetermined when you buy the contract. Thus traders are turning to binary options to simplify their choices while giving them the chance of good profits.