With the rising popularity of options trading over the past few years, a number of new binary option trading platforms have emerged. These platforms are essentially web-based entities whereby users can make trades in real-time, with the intention of profiting via correct, short-term price predictions regarding the direction of an option’s underlying asset such as a stock, index, currency, or commodity.
As of early 2012, it was estimated that there were approximately 90 such platforms, with more on the way. These trading platforms generally provide standardized short-term binary options that have a pre-determined profit or loss and that may not be liquidated prior to the options expiry.
Profits can often be in the range of between 61 and 85 percent when using options that are in-the-money when they expire, and weekend binary options trading can offer the potential for traders to profit as high as 400 percent. In addition, traders are typically not required to pay a trading commission for use of these platforms.
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How Binary Options Trading Platforms Work
The trading of binary options can be learned quickly and easily – therefore, even those who are beginning traders can place trades and potentially make a profit within a short period of time. In using the services of a binary options trading platform, a trader will first be required to decide whether the option’s underlying asset will be at a price higher or lower at its expiry in relation to its price at the time of the option purchase.
Once a trade is placed by a platform user, the trader will then set what is referred to as the “spot price” of the underlying asset. This will in turn become the “strike price” of the option that they have chosen. It is after this that traders will begin to monitor the possible up and down movement of the underlying asset’s price.
Should the price of that asset close above the option’s strike price, the option will be considered to have closed in-the-money, and the trader will profit. Even if the underlying asset’s price remains the same as its price at the time of option purchase, the trader will receive his or her money back.
Other Platform Amenities Offered
In addition to offering an arena for binary options trading, platforms oftentimes will provide other helpful amenities such as trading tutorials for beginners and advanced traders, as well as customer service representatives who are available to answer questions and provide assistance via phone, email, and/or online chat.
With today’s high demand for convenience and trading-on-the-run, some binary options platforms have also begun to offer smartphone and mobile device applications that allow traders to access their accounts, monitor their positions, and even make trades from the palm of their hands.
Advantages of Using a Binary Options Trading Platform
There are numerous advantages to using binary options trading platforms. Certainly, the ability to profit is one of the top benefits to using these sites. Additionally, binary options trading platforms can make trading quite simplistic.
Binary option trades can be made with little or no knowledge of the stock market, and investors must only choose whether the price of an option’s underlying asset will be higher or lower at the time of their chosen options expiration.
In addition, unlike the Chicago Board Options Exchange and other large exchange related binary options providers, the smaller binary options platforms will typically not charge any type of direct fee or commission from their investors when they are purchasing an option. This commission-free attribute can make trading on these platforms quite appealing.
