Binary Option Trading Guide: Determining Whether to Click on Put or Call

Binary options trading at a glance

Taking from the obvious keyword, one should have an idea that binary options involve financial dichotomies. Using the most basic binary option trading guide, a prospective investor should be able to know that this trading platform only has two pre-determined outcomes defined in black and white, no grey areas in between. A binary options trading guide should lay out the risks and the gains on the table on the onset of the trading. Another dichotomy is present in binary options is the call and put dichotomy. In trading any binary options, you have to choose either one of the two. Simple, but a trading guide should enumerate the intricacies involved in order to make the decision that would result to financial gains.

A binary option trading guide to differentiate call and put options

Binary options trading can very well be the most straightforward trading platform in the planet to date. Before differentiating a put option and a call option, one should understand the other basic terms first. First, the market price which is the value a stock or commodity is presently trading or the exchange rate of a particular currency pairing if you’re trading forex. Second, the strike price is the fixed price in which a particular derivative contract can be exercised within a given time period. In short, this is the price if one is going to buy or sell shares of a particular stock, commodity, index and currency. Once you understand this, the difference between call and put options is fairly easy to understand. Basically, a trader opts for the call option if he thinks that the market price will close higher than the current strike price. On the contrary, he chooses the put option if he thinks that the market price will close lower than the current strike price. At the end of a trading period, if you chose the right option, you gain the pre-established amount. If you get it wrong, you lose it all.

How to make an informed decision

For those who will really take time to study the type of binary option trading that they want to engage in, this trading platform can easily be a financially lucrative endeavor.. Depending on which binary option trading you want to enter, you should look into more complex concepts such as volatility, maturity date and interest rates just to name a few.

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