Types of Binary Options from Optionbit

FREE Marketclub Trading Software

OptionBit offers traders the ability to trade three types of binary options: Above / Below options, Touch options and Range options. Traders can achieve great flexibility with their trading by exploiting the unique characteristics of each type.

Above / Below Binary Options

Above / Below is the most popular type of binary option at OptionBit. The majority of traders are very familiar with this type of option. Based on “cash-or-nothing”, Above /Below binary options expire in-the-money when the trader correctly predicts if the price of the underlying asset will move above or below the predetermined strike price by the time of expiration. Like other binary options, payouts are known from the onset so traders know exactly where they stand before buying the contract. With OptionBit, traders can get a high returns between 75 - 81% when trading Above/Below options.

Above-Below Option Trading Scenarios

If you decide to try trading Above / Below options, then sign up for a free account with Optionbit (or one of the other leading brokers such as anyoption or eztrader). After scanning over the available assets, you decided that Gold is the asset you would like to trade. By quickly looking at the historical graph that day and conducting a technical or fundamental analysis, you notice that Gold is currently trading at a low point for the day. Based on this information, you decided that this low point is a lull rather than a continuing drop and you think that Gold will finish higher than it’s current price in one hour. Since you believe that price of the underlying asset will increase, you buy a Call option that expires in 60 minutes. However, If you believed that the price of the asset would decrease, you would then buy a Put option. Since it’s your first time trading, you decided to start with a small investment of $100. If when the contract expires, the price of Gold has risen, you would have finished in-the-money and take home a high return between 75 - 81% of your initial investment.

Touch Binary Options

Touch options are another type of binary option available on OptionBit. Touch options expire in-the-money if the price of the underlying asset touches a predetermined barrier by the time of expiration. Price barriers can be higher or lower than the current price of the underlying when the option is purchased, enabling traders to take advantage of the traditional omni-directionality offered by binary options. OptionBit also offers variations on Touch Trading, including “Touch Up” and “Touch Down”.

Touch Option Trading Scenarios

You decide to try touch trading. After looking at the assets available, you decided that you would like to trade a touch option on Microsoft. In the trading room, you select Microsoft as the asset you would like to trade and see that the option is expiring in 30 minutes. Depending on the current price of the asset, two options are available with predetermined strike prices, “Touch Up” and “Touch Down”. You believe that the price of the underlying asset will touch the high strike price until the expiry date, so you select “Touch Up”. On the other hand, if you believed that the price of the underlying asset will touch the low strike price, you would select “Touch Down”. If when the contract expires the price of Microsoft has touched the option you selected, you’ll finish in-the-money and take home a high return between 75 - 81% of your initial investment.

Range Binary Options

Range is the third type of binary option offered by OptionBit. Based on tunnel trading, Range options have a predetermined upper and lower boundary. When buying a range option, the trader must predict whether the price of the underlying asset will stay “In” or go “Out” of a predetermined range at the time of expiration. This way the trader can trade on the volatility of the asset – If he or she thinks that the asset volatility is high, he or she can buy an “Out” of the range option. On the other hand, if the trader thinks that the option is not volatile, he or she should buy an “In” range option.

Range Option Trading Scenarios

You decide to trade a forex option, USD / EUR. In the trading room you see that there are two options available, “In” and “Out”. Each option has a predetermined range and you must determine if the asset will be in the upper or lower range at the time of expiration. You think that the price of the underlying asset will be in the range at the time of expiration so you select an “In” option. If you thought that the price of USD / EUR will be out of the range at the time of expiration, you should have bought a “Out” option. If when the contract expires the price of USD / EUR stayed in the predetermined range that you selected, you’ll get a high return on your investment between 75 - 81%.