There have been quite a lot of Binary Options trading types that are available for trading. New comers find them quite confusing dealing with. In most cases, we find the Binary Options broker doing quite a fair amount of job in trying to explain the various types of Binary Options and many times they fail in putting out in clearer terms. Hence why we’re interested in getting things straightened out.
Some of the most common binary options types includes:
Boundary Options – The Boundary option is also known as the In/Out or Range option. When deploying the “IN/OUT” option, a trader sets two ranges, one higher and the other lower than the current market value of an asset, and to make profit the strike price is expected to expire within the forecast range (IN) or outside the forecasted range (OUT).
Pair Options – The pair options just as the name implies involves pitching an asset versus the other and make a bet on the one you feel is going to outperform until the expiry time. For instance if you trade the pair Apple vs. Facebook, let’s say Apple outshines Facebook, hence your option will expire In The Money, but if Facebook takes the day, it so means that your option is Out of The Money. The direction the pair takes is inconsequential, as your win depends on who did better in comparison to the other. Hence in our example, even if Apple declined, it can still be the winner if Facebook declined lower.
One Touch/No Touch Options – The ONE TOUCH option is an option type where the strike price is expected to touch a particular level before the option expires. It is expected that price touches this level once, until the option expires. Regardless of where price reaches, once it has touched, then we’re In The Money.
On the opposite rule however is the NO TOUCH option, where we’re In The Money if price doesn’t strike the predefined level. The NO TOUCH option requires period of low volatility in the market and the Asian session seems most suitable.
Ladder Options – Ladder options are quite complicated but at the same time easy when you get the hook. This option type resembles the “Touch Option”, but herein is the catch. With the Ladder Options, a trader gets extra levels, away from an initial level. Let’s say our current price is 1.1400; we then could have 1.1450 as our first level and if it strikes, you win. What we just illustrated is typical of “Touch Options,” but when extra predefine levels are fixed at 1.1500, 1.1550, 1.1600, etc. (usually fixed by the broker), it then defines a “Ladder Option.”
Up/Down Options – This is one of the most easiest option types, all that is required is for the expiry price to be higher or lower than the price in which the trade was opened, depending on whether “UP” or “DOWN” was selected. If you picked UP (Call) and at expiry time the strike price is just a pip away from the open price, then you’ve won the entire payout. Conversely, if DOWN (Put) was selected and at the expiry time the strike price is a pip below the open, then you’ve won the entire payout. That easy I guess!