Exchange-Traded Binary Options

AAA

DEFINITION of 'Exchange-Traded Binary Options'

Exchange-traded binary options, regulated by the CFTC, let you speculate on the price of some of the most heavily traded forex, commodities and stock indices markets with short-term hourly, daily or weekly expirations.  The all-or-nothing trade (hence the term binary) is a derivative, meaning you don’t actually buy or sell the asset itself.  Binary options have a fixed payout, so you know your potential profit—or loss—ahead of time.   Exchange-traded binary options have transparent pricing and no counter-party risk, unlike those traded over-the-counter.

INVESTOPEDIA EXPLAINS 'Exchange-Traded Binary Options'

Binary options trading is simply making a true or false prediction about the direction of a market and main benefits include short-term expirations, straight-forward risk/reward profiles, defined risk and low collateral required to trade. Binary option contracts always settle between 0 and 100 at expiration but traders can liquidate the contract at any point before expiration limiting losses or locking in gains. 

RELATED TERMS
  1. Binary Option

    A type of option in which the payoff is structured to be either ...
  2. Spot Premium

    The money an investor pays to a broker in order to purchase a ...
  3. Asset-Or-Nothing Call Option

    A derivative security for which there is no payoff unless the ...
  4. Asset-or-Nothing Put Option

    An option payoff that is equal to the asset's price if the asset ...
  5. Cash-Or-Nothing Call

    An exotic option whose payoff is a predetermined amount (sometimes ...
  6. Cash-or-Nothing Put

    An exotic option whose payoff is a specified fixed price (sometimes ...
Related Articles
  1. What You Need To Know About Binary Options ...
    Options & Futures

    What You Need To Know About Binary Options ...

  2. Introduction to SPOT Options
    Options & Futures

    Introduction to SPOT Options

  3. Exotic Options: A Getaway From Ordinary ...
    Options & Futures

    Exotic Options: A Getaway From Ordinary ...

  4. The Top Technical Indicators For Options ...
    Options & Futures

    The Top Technical Indicators For Options ...

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center