Binary Options...any players here?

Mike

Mike

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Jun 27, 2006
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Until recently I had never heard of binary options, until I saw an ad for some trading platform on FB.

Anywhooo....just wondering if anybody here trades in binary options and if so: why binary over regular options? I would have to assume because of the potential gains, but don't those short term gains come with substantial risk?
 


i used to work in investment banking. i stuctured CDO and CDS. I also traded equity derivatives. more simply, stock options. a binary option is just a european stock option. There is some payout or no payout at all. either 0 or x. hence binary. i wouldnt say they're more profitable than other options they are valued differently.
 
binary options i would say are more tricky than regular "american" options. if you're going to be learning a market to trade i'd stick with regular american stock options or just simply equities. the derivatives market moves fast and there's alot of really smart people trading in it. if you'd like to learn about regular options i do have some recommendations book wise to learn about pricing models and trading volatility. binary options up until recently were just OTC(over the counter) and had liquidity risk. however i think over the last year or two the CBOE and maybe AMEX have allowed trading of binary options at their desks. could be wrong though.
 
AFAIK, binaries are primarily a retail product and are, basically, a punt.

There's not really any other use for them that I can think of, they're quite fun to dabble in though if you fancy a flutter.
 
SEO_Mike said:
Anywhooo....just wondering if anybody here trades in binary options and if so: why binary over regular options? I would have to assume because of the potential gains, but don't those short term gains come with substantial risk?
Click to expand...

Binary options are much easier to think of in terms of a punt. You get fixed odds on betting that a stock will finish above/below a certain price. If you think the risk:reward is in your favor, then you go for it. The gains don't have to be short term, but those are the more exciting bets :D

Not surprisingly, a lot of companies offering these for the retail "investor" also offer other forms of gambling on their websites. You *will* get Smart Priced if you win consistently. The spread is also usually pretty bad to start with.


bigwavesurfer said:
a binary option is just a european stock option. There is some payout or no payout at all.
Click to expand...

Uh, kind of, but a binary option has a fixed payoff and typically doesn't deliver stock at expiration.
Really an over-under sports bet is a better analogy.
 
You should look into trading micro stocks. I trade in stocks where the value is between $0.0001 to $0.05... Risky as shit but pays off huge if you can follow the drinking gourd. Alot of the OTCBB's will bounce between .0001 and .0003... You can make 200% returns all day if you got the balls (and a little luck).
 
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