Call & Put Binary Options

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Call Put Binary TradingBinary options is the new and fast way of profiting when deciding on market trading. Not only is trading binary options simpler, it is a more controlled environment and offers higher profits. One simply needs to predict the future price per asset within a certain time frame. The ease of binary options trading provides traders with two choices – the option to execute either a CALL or a PUT strategy.

Depending on how the markets are moving, traders will make an assessment on whether an asset will go up (CALL) or down (PUT) in the market within a pre-determined time, binary options are offered against a fixed expiry time. They can be bought on virtually any financial product offered by the broker they decide to trade with and can be bought in both directions of trade either by buying a “Call”/“Up” option or a “Put”/“Down” option.

A call option is an option contract in which the trader has the opportunity to buy a certain asset at a certain price within a fixed period of time. A trader will select the CALL option when he predicts that the ‘strike price’ will be on the increase – this is when the market is showing a bullish growth.

A put option is an option contract in which the trader has the opportunity to sell a certain asset at a certain price with in a fixed period of time. A trader will select the PUT option when he predicts that the ‘strike price’ will be on the decrease – this is when the market is bearish.

Example of a CALL Binary Option

Facebook has just posted an earnings report that exceeded expectations of the market analysts. You decide that this ‘good’ bout will continue throughout the financial day and you decide to “buy/call”.

Facebook Binary Trading

Select the Facebook as your underlying asset for your Binary Option, then choose the hourly expiry time (anything from 30 seconds to one year). I would suggest a short term trade on Facebook. After selecting an investment amount of $100 (Any given broker could offer up to 80% payout and a refund of 10%). Activate a CALL binary option at an opening price of 3.4002 is recorded. One hour later, the Facebook is at 3.4010 you are in-the-money. You will receive a payout of $80. (80% of your $100 investment).

Alternatively, if the Facebook had finished below 3.4001 then you would have been out-of-the-money and would have received a 10% refund of your $100 investment of $10.

Example of a PUT Binary Option

Apple stock has just posted an earnings report that did not meet the expectations of the market analysts. You decide that Apple stocks will continue to deteriorate throughout the financial day and you decide to “sell/put”.

Apple Binary Trading

Select the Apple as your underlying asset for your binary option then select the daily expiry time (anything from 30 seconds to one year), make the investment amount of $100. Note that this broker’s payout ratio is 80% and a return on investment is 10%. Click the PUT binary option. An opening price of $40 is recorded. At expiration time (which you selected 1 day), Apple’s shares are $39 and below you are in-the-money. You receive a payout of $80, which is 80% of $100 as initially invested.

Instead, if Apple’s share price had finished above $40, then you would have been out-of-the-money and would have received a 10% refund of your $100 investment of $10.

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Jason B Kruger

Professional Trader at WhyOptions
Jason B. Kruger is a Professional Trader & Chief Editor for WhyOptions.com, who is considered ‘The Authority’ on Binary Options Trading Strategies, Reviewing Brokers,Providers and their Products.
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