Binary Options Trading | Digital Options Trading | Best Brokers to Trade Binary Options

What are the Binary Options Trading Types ?

There are a number of different option types to choose from. The most popular types are listed in the brief glossary below.

• Up/Down (High/Low) – The most simple, common and prevalent binary option. This is all By accurately predicting if the market price will be less or more than the strike price at the end of the expiry period will reward you a payout. The trader buys a call option if he thinks the price of the asset will increase from the current market value. If he thinks the price of the underlying asset will drop compared to the current market price, then he will open a put option.
• In/Out (Range or Boundary) – This option sets a “high” figure and “low” figure. The upper and lower limits of boundary or range are determined by the broker. Furthermore, the trader selects the preferred time duration and asset. You are then making a determination as to whether the price will finish within or outside of these boundaries. In this form of binary trading, traders have to predict whether the price of the asset they have chosen will stay within a given price boundary or stay out of it. Like high/low if the trader accurately predicts the outcome, one will get a payout. If he loses, he gains nothing and also loses his initial payment.
• Touch/No Touch – Touch binary options are also known as one-touch binary options. It is the exact opposite of no-touch binary options trading. In one-touch binary options, the market price of the underlying asset much reaches the strike price at least once before the expiry. Levels will be set that are either higher or lower than the current price. The trader has to predict whether the actual price will ‘touch’ those levels at any point between the time of the trade an expiry. Payout will come as soon as the touch takes place. In no-touch binary options, the trader selects a strike price that is above or below the current market price.

After selecting the expiration time, he places the trade. To secure a payoff, the market price of the underlying asset should not coincide with or exceed the strike price, before expiry. Here, variable payouts come into play. The payout depends on the distance between the strike price, market price, and the expiry period. The further market price is away from the strike price, higher the payout. Longer the expiration period, lower the payout percentage. The closer the market price is to the strike price, the higher is the payout. Another area where no-touch options differ from high/low is the payout percentage. Payouts for high/low rarely exceed 95%.

Please Note: With a touch option, that the trade can close before the expiry time – if the price level is touched before the option expires, then the “Touch” option will payout immediately, regardless of whether the price moves away from the touch level afterwards. But in the case of no-touch, traders can enjoy a payout of 200% or higher. In some cases, it exceeds even 500%.

• Ladder – These are commonly referred to as ‘call’ and ‘put’ by most brokers. Like one-touch options, the payout for ladder options exceeds 100%. Each ladder is a different price point, which requires price movement from the current market price.

These options behave like a normal Up/Down trade, but rather than using the current strike price, the ladder will have preset price levels (‘laddered’ progressively up or down). These normally demand a substantial price move. The flip side of this is returns will frequently exceed 100%. Although it is worth noting, both sides of a trade are not always available. There is an upper limit and a lower, in boundary binary options. Also, there are multiple price limits on ladder options. These can often be some way from the current strike price. As these options generally need a significant price move, payouts will often go beyond 100% – but both sides of the trade may not be available. The exact number of limits depends on the broker and the underlying asset that you are trading. Each limit has a different payout percentage. For each price limit, there is an ‘above’, or ‘below’ trade option. Greater the price movement, the higher the payout percentage.