5 Types of Binary Options Trades for Beginners
Before starting to binary options trade find out 5 most popular types of binary options that will give you an idea of which ones will work best for you.
- Call and Put Options
- Boundary Options
- Touch Options
- Double Touch and Double No Touch Options
- 60 Second Options
Call and Put Options
This is the classic type of binary options, offered by virtually all binary brokers.
With this type of options, sometimes also called high/low or up/down, when you think the price of the asset should rise over a period of time, you choose a Call option. When you think the price of the asset should fall over a period of time, you choose a Put option.
Call/Put options are very easy to understand and trade, since there are just two situations to choose from. That’s part of the reason why they became so popular.
However, there are even simpler kinds of binary options, such as Boundary options.
This type of options, sometimes called Range Options, are options where the price needs to stay within a range that is pre-defined, until the option expires.
This means that when you buy this type of option, you need the price to stay between the upper price boundary and the lower price boundary.
Boundary options are even easier to understand than put/call options, however it has been proven statistically that they’re more difficult to predict than standard put/call options. That’s why brokers are willing to give an extremely high payout if you win, sometimes even 300% or more, as opposed to around 75%-85% for put/call options.
When you purchase a Touch option, you’re betting that the price of an asset will reach a certain point. It is enough that the price would just touch this point, for you to profit from that option.
That’s why when you were right in your assumption, you don’t need to wait till the option expires. As soon as price reaches your target, the trade closes instantly and you receive your profit.
If the price didn’t reach your anticipated point, the trade remains open until the option expires at a loss.
There’s also the opposite type of this option, called “No Touch” – with this type of option, there’s a pre-determined price point that you bet the market will not trade at.
If the market does reach the price, option expires immediately at a loss, while if it doesn’t reach the price – you win and get the predefined profit.
Double Touch and Double No Touch Options
Similar to Touch options, as explained above, however in this type of binary options you are dealing with two price levels.
You profit when price goes either to a target that’s above the current market price, or it goes to a target that’s below the current market price.
As soon as price reached either of the two points, the option is closed with profit.
Double no touch options also require two price points, only in this case, you profit when price doesn’t touch either of the two points until the time the option expires.
60 Second Options
This type of options resembles the regular Call/Put options, only everything happens in “Turbo” mode – the trade ends within one minute.
One minute options provide excitement and challenge, and can be very profitable if you know what you’re doing. Trading 60 second binary options is exactly what it sounds like. With one minute options, you can open and close trades in as little as 60 seconds.
However, if you’re a newbie it is best to wait a while before starting with this kind of options.
These are the most popular types of binary options that you should know, and if you already have a good command of call/put options, then you should give it a try.