An Option in financial terms is kind of an agreement that allows a buyer but doesn’t obligate to buy or sell an underlying asset before or after a pre-defined date. This is a common term in finance and investors use this contract option for their benefits. Binary Option Trading is also an updated part of these options and it’s usually defined as the option that allows the buyer to get a permanent amount of profit on what he is buying or end up with nothing at the end. People usually called this option trading as gambling because in this scenario, either the buyer gets the preset amount of profit after the pre-fixed date or end up with nothing at all. Binary option trading is also referred to as fixed return option or digital option. In different trading markets, it has different names and referred differently.
Explanation and Brief Description:
People usually find it quite hard to understand the basics of an option in financial world and the key reason behind that is because it’s a wide term and every financial market has its own rules and references for options. On the contrary, binary option trading is quite easy to understand. This option only has two outcomes unlike other options and the buyer ends up either with the preset amount of capital or zero at the end. If you want to understand the binary option trading, imagine you buy stocks of a company at $10 each stock and you agree to get a binary option payoff at $100 per share after a specific date. When that date arrives, if those stocks have value more than $10 in the stock exchange, you get $50 for each share where on the other hand, if the value is less than $10, you get nothing.
Is Binary Option Trading a Scam or Legit Trading?
There are many statements about if the binary option trading is a scam or it’s an authenticated trading scheme. Those who don’t like it usually refer to it as the gambling in the stock exchange because it’s a reality that you might get a lot of profit in form of payoff or you get nothing at all at the end. It’s kind of like gambling but you can control the situation here. You just require being familiar with the trading and stock position of the company that you are going to invest in.
If you are sure that this company will do much better after the expiry date, you can invest without hesitation where if you don’t know what will be the situation or the value of the company after the payoff date and you still invest in it, yes it’s a gambling. Different people and trading experts refer to binary option trading as a different scheme or option but they don’t call it scam. You are not blind trusting on anyone in this career and you are investing with your own knowledge and investing skills so you shouldn’t call it a scam and it’s not a scam either.