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Blog Basics of Put or Call Binary Options Trading If you are new to trading online, then you will come across two common words in this industry and that is the put or call option. These are the most popular binary option trading words.

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Option Expiration Date Definition of Binary Options: Binary Options are like regular options in that they allow you to make a bet as to the future price of a stock. They are called binary options for this very reason. The United States has been slow to accept binary option trading, but binary option trading has been quite popular in Europe for a few years, especially as they relate to FOREX. The best way to understand these relatively new type of securities is to look at the example below.

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Binary Call Option Explained The binary options trader buys a basic binary call option if he is bullish on the underlying in the very near term. This basic binary call option is also known as the common "High-Low" binary call option. By purchasing a basic binary call option, the trader is simply speculating that the price of the underlying asset will be higher than the current market price when the option expires, typically within next few minutes or several hours.

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Binary options depend on the outcome of a "yes or no" proposition, hence the name "binary. At the time of expiry, the price of the underlying asset must be on the correct side of the strike price based on the trade taken for the trader to make a profit.

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Depending on the return offered for the contract, the trader makes an appropriate profit. The contract has an expiry time of 10 minute expiry. If EURUSD does trade lower than the price at which the option contract was entered, the option is deemed to have expired in the money and the trader therefore makes a profit.

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Regulation and fraud[ edit ] Further information: Securities fraud Many binary option "brokers" have been exposed as fraudulent operations. Manipulation of price data to cause customers to lose is common. Withdrawals are regularly stalled or refused by such operations; if a client has good reason to expect a payment, the operator will simply stop taking their phone calls.

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