Trading Binary Stock Index Options

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Trading Binary Stock Index Options

Trading binary stock index options is often characterized as a quick and easy way to profit from the stock market. Those who promote this means of trading stock options remind us that in trading binary stock index options risk is limited to the price paid for the options contract. This, of course, is the case in all options trading. In trading binary stock index options the trader pays for his contract and typically enjoys a fixed return on his investment if the trade goes as expected. Advertising for companies that offer trading in binary options often refer to binary options as the most rapidly growing part of the options market. The question that the options trader needs to ask is if trading binary options on stock indexes is a profitable way to trade options.
Cash or Nothing versus Asset or Nothing Binary Options
Binary options trading gets its name from the fact that there are generally two possible outcomes to a trade, payment of something or nothing. Although widely traded in the US options market , these options are typically European style in that the issue is settled at the end of the contract period and not before. Also, there are two types of payoffs in binary options trading. In one the trader receives a set amount of money if the call option finishes in the money. In the other he receives the amount of the equity. The second case is similar to regular options trading in that the trader can benefit to the extent that the index advances. In the first case his profits are limited by the nature of the contract.
Looks Easy but Be Careful
Trading binary stock index options is often presented as being easy when compared to other kinds of options trading . If profits are not your motive the process can be very easy! Set up a trading account and purchase the appropriate hardware and software to make trades online. When all of this is in place, just pick an index to trade, decide whether you think that the index will move up or down, choose how much you want to “wager” and click the “buy” button. Is this fast and easy? Maybe yes, maybe no.
Depending upon the degree of sophistication required computer trade stations and trading software can be reasonable in price or very expensive. Make sure that whatever software you purchase that it is compatible with the online broker through whom you trade. Remember that when you put money into a trading account it should be money that you can afford to lose. Now we are to the point of the so called easy steps to trading binary stock index options.
Choosing Which Index to Trade
It is absolutely basic and essential to investing or trading equities is to know what you are trading and why. This is not a quick and easy matter. Options traders spend a large amount of their time deciding on this issue.

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Trading Binary Stock Index Options

  1. 1. Trading Binary Stock Index OptionsBy www.Options-Trading-Education.com
  2. 2. To see a complete version of this presentationand to obtain our free EBook follow this link:http://portal.sliderocket.com/BLOUC/Trading-Binary-Stock-Index-OptionsRead the Forex Conspiracy Report for insightsinto trading foreign currencies. Get your copy athttp://portal.sliderocket.com/BLOUC/Trading-Binary-Stock-Index-Options www.Options-Trading-Education.com
  3. 3. Trading binary stock index options is oftencharacterized as a quick and easy way to profitfrom the stock market. www.Options-Trading-Education.com
  4. 4. Those who promote this means of trading stockoptions remind us that in trading binary stockindex options risk is limited to the price paid forthe options contract. www.Options-Trading-Education.com
  5. 5. This, of course, is the case in all optionstrading.In trading binary stock index options the traderpays for his contract and typically enjoys a fixedreturn on his investment if the trade goes asexpected. www.Options-Trading-Education.com
  6. 6. Advertising for companies that offer trading inbinary options often refer to binary options asthe most rapidly growing part of the optionsmarket. www.Options-Trading-Education.com
  7. 7. The question that the options trader needs toask is if trading binary options on stock indexesis a profitable way to trade options. www.Options-Trading-Education.com
  8. 8. Cash or Nothing vs. Asset or Nothing Binary Options www.Options-Trading-Education.com
  9. 9. Binary options trading gets its name from thefact that there are generally two possibleoutcomes to a trade, payment of something ornothing. www.Options-Trading-Education.com
  10. 10. Although widely traded in the US optionsmarket, these options are typically Europeanstyle in that the issue is settled at the end of thecontract period and not before. www.Options-Trading-Education.com
  11. 11. Also, there are two types of payoffs in binaryoptions trading.In one the trader receives a set amount ofmoney if the call option finishes in the money. www.Options-Trading-Education.com
  12. 12. In the other he receives the amount of the equity.The second case is similar to regular optionstrading in that the trader can benefit to theextent that the index advances.In the first case his profits are limited by thenature of the contract. www.Options-Trading-Education.com
  13. 13. Looks Easy but Be Carefulwww.Options-Trading-Education.com
  14. 14. Trading binary stock index options is oftenpresented as being easy when compared toother kinds of options trading. www.Options-Trading-Education.com
  15. 15. If profits are not your motive the process can bevery easy! Set up a trading account andpurchase the appropriate hardware andsoftware to make trades online. www.Options-Trading-Education.com
  16. 16. When all of this is in place, just pick an index totrade, decide whether you think that the indexwill move up or down, choose how much youwant to “wager” and click the “buy” button. Isthis fast and easy? www.Options-Trading-Education.com
  17. 17. Maybe yes, maybe no.Depending upon the degree of sophisticationrequired computer trade stations and tradingsoftware can be reasonable in price or veryexpensive. www.Options-Trading-Education.com
  18. 18. Make sure that whatever software you purchasethat it is compatible with the online brokerthrough whom you trade. www.Options-Trading-Education.com
  19. 19. Remember that when you put money into atrading account it should be money that youcan afford to lose. www.Options-Trading-Education.com
  20. 20. Now we are to the point of the so called easysteps to trading binary stock index options. www.Options-Trading-Education.com
  21. 21. Choosing Which Index to Tradewww.Options-Trading-Education.com
  22. 22. It is absolutely basic and essential toinvesting or trading equities is to know whatyou are trading and why. www.Options-Trading-Education.com
  23. 23. This is not a quick and easy matter.Options traders spend a large amount of theirtime deciding on this issue. www.Options-Trading-Education.com
  24. 24. Deciding Whether the Index Is Likely to Rise or Fall www.Options-Trading-Education.com
  25. 25. Options traders use the same methods offundamental and technical analysis as stockinvestors and traders in order to improve theirchances of making an accurate and profitabletrade. www.Options-Trading-Education.com
  26. 26. Succeeding in options trading requires adisciplined approach.The reason that many traders stick to Americanstyle, standard, options trading is that they canexit a trade at any point between purchase andcontract expiration. www.Options-Trading-Education.com
  27. 27. Often times there is more profit to be made atthe moment than when a contract expires.Traders can also exit in order to limit theirlosses. www.Options-Trading-Education.com
  28. 28. Fine tuning one’s ability to buy and sell at theideal time can be a lifetime pursuit and onlylooks easy when one is watching a pro. www.Options-Trading-Education.com
  29. 29. Money Managementwww.Options-Trading-Education.com
  30. 30. In trading binary stock options as in all optionstrading, risk management in option trading isessential. www.Options-Trading-Education.com
  31. 31. Options trading is not and should never be a tripto the casino.How much to trade and how many trades toenter into at a given time requires experience.Start small and go slow and never “bet” whentrading binary stock index options. www.Options-Trading-Education.com
  32. 32. For more insights and useful informationregarding options and options trading, visit
  33. 33. www.Options-Trading-Education.com

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