Binary Options Trading
A Binary Option represents an investment mechanism which has turned one of the most difficult kinds of financial investments - trading option contracts - into an easy and understandable process. Prominent financial specialists and economists were involved in options theory; later, they developed mechanisms for practical application of purchasing long-term financial contracts. A large number of mathematical patterns and calculation formulas applied in trading were called after them. The first options exchange was the Chicago Board Options Exchange established in 1973.
In 2009, provided financial services developed logically into a Binary Option mechanism, which significantly simplified both trading processes and investors' preliminary calculations. Possible payoffs from a Binary Option contract were fixed even before a contract was made, and were based on the value of a basic financial asset when the option expired. It removed the necessity to make rather difficult preliminary profit calculations. Moreover, it didn't only fix possible losses amount within the limits of deposit amounts, but also made it possible to cover investment risks with the help of a mechanism returning a part of deposit amount to an investor in case of unsuccessful contracts.
In other words, the use of a Binary Option mechanism enables an investor to estimate both possible profit and possible loss amount (in case of non-fulfillment of obligations) before a contract is made. It helps fix trading risks in the limit of strictly predetermined amounts, increasing investment interest in this financial mechanism.
The Binary Options realization scheme differs from the ones that have been accepted before in Europe and America. One can make simultaneous option contacts for any fixed period of time offered for trading the given financial instrument. Nevertheless, as opposed to traditional "vanilla" options, the option is realized strictly at the time that has been specified when making the option contract.
The simplest realization doesn't imply that the result and the payoff from an option contract are dependent on the contract execution price; an investor only has to predetermine a price further movement correctly. There exist more complex option realization patterns which make it possible to apply more profitable trading strategies.