Binary Options, digital or Fixed Return
Binary options are also known as “betting options,” “digital options”, “fixed return options” or “all or nothing.”
In this type of action the investor does not buy the stock itself, but the right to charge a certain amount if, at maturity, the condition that the action up or down relative to the price of it to make the purchase. So the things the buyer will be entitled to the sum agreed upon maturity, provided that the condition defaults.
In negotiating these kinds of options, the investor will choose the option you wish to purchase, each option has a nominal value on which the investor will have to decide if you “CALL” or “PUT”, i.e. if the value of the option to maturity will be above or below the value at the time of purchase. You could say that by investing in binary options really important is the tendency of action (up or down) and not the indexes themselves.
The value of the option at maturity determines if the utility ended with “In the Money” or loss “Out of Money”. If the option is closed “In the Money”, the investor will earn one hundred percent of the value of the option which is determined at the time of purchase. If the option closes “Out of Money” option value is zero. However, many brokers provide a redemption value may reach 15% of the investment.
As can be understood, the risk in this type of action will always be limited and the investor will know from the time of purchase what their expectations of profit and how much to risk in case of loss.
You can trade binary options on virtually any asset being the most popular:
Actions (Apple, Microsoft, BBVA, etc.).
Stock indices (Nasdaq, Dow Jones, IBEX, etc.).
Raw materials (gold, silver, oil, etc.).
Between foreign currency pairs. (USD / GBP, EUR / JPY, etc)