What Are Binary Options?

A binary option is a highly specialized option contract which cannot be sold after purchase. This type of option is simply held by the purchaser until it expires with a predetermined profit or loss.

The advertisements that describe a 90% profit simply describe an option deal whereby a 90% profit (or loss) would be generated if the underlying asset performs in the manner that you predict.To get more information about binary option visit .

For example, let’s say the Dow Jones Industrial Average opens up at 16,501. You think it will close higher by the market close. So you decide to purchase a $500 call (upward price expectation) option with an end of day expiration. The day grinds to a close with the Dow closing up one point at 16,502.

Your option contract appreciates in value by 90%. Thus, your $500 appreciates to $950. If the DOW closes down, you lose the contract and will lose most of your $500.

Some brokers will give you back 15% on losses. But this type of option is binary in nature, meaning you will either win or lose at the time of expiration.

Binary options have been around for years as private over-the-counter deals. These exotic options were first introduced to the general public in 2008, when the brokers started offering the deals online. Today there are dozens of brokers who specialize in these exotic options. Most of these are located offshore in places like Cyprus and the British Virgin Islands.

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