Option - what is it? Options types. Options trading

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:46

Earnings on the Internet is becoming more and more popular every day. There are several reasons for this: firstly, this is remote work. A person who is forced to get up early every day and stand in traffic jams for several hours will gladly exchange his main place of employment for a free schedule in his own apartment. Of course, such earnings also have their drawbacks: for example, it will not be easy for a beginner to find his niche, but it should be said that if in real life a person was engaged in intellectual work, then he will easily find himself in the online sphere.

There are many ways to fulfill yourself in the global network: from freelancing (work for hire) to running your own business. The income associated with trading on the financial exchange stands apart. For many, this area is something of a mystery, as there is no idea about the securities markets on the Internet. Meanwhile, the transfer of the exchange to the World Wide Web has made it accessible to the general public. If earlier he could only trade assetsa professional trader who has access to the place of trading, now everyone can do it - just a couple of clicks is enough. The most advertised type of exchange games is options trading. Surely, many have met advertisements of various trading platforms, tempting offers of brokers on deposit bonuses. It is worth trusting this. Binary option - what is it? These things will be discussed in the article.

What is an option

Actually, this concept appeared quite a long time ago. After that, it was successfully adapted to the financial markets. Option - what is it? This is a certain contract, after the expiration period of which several outcomes are possible, which will determine in whose favor the option is closed. In other words, it is a dispute on any event. The simplest analogue of an option can be considered a bet on a sports competition. Further, with the advent of the opportunity to trade securities and currencies on the Internet, this concept acquired a slightly different meaning, although the essence remained the same. Quite often there are people who, upon hearing the word “option”, immediately imagine huge markets with financial analysts and trades.

Now this is not entirely true, and brokers in some way can even be considered bookmakers. Why this is so, we will consider below.

Binary options

Real options are most widely used in online currency markets in binary, or, as it is also called, binary form. What is the general principle of trading such assets? Everything is extremely simple. Suppose you have already registered on a broker site and selected a currency pair. Next, you need to determine the expiration time of the option - the period through which it will be closed (different parameters are possible here, from one minute to a whole month), indicate the value of the contract and select the expected direction: up or down. In the event that, after the expiration period, the value of the option in points will be more (or less) than that which existed at the time the transaction was opened, the option will be considered winning. In other words, you will receive money if you guessed the direction of the chart movement.

Why brokers are like bookmakers

As mentioned above, many people think that options trading is akin to sports betting. This is partly true. The similarity is observed, firstly, with the organization of work: you place a bet, wait and get or do not get a result. The second reason can be considered predictability (it is present in both cases). Of course, the outcome of sports competitions can be assessed at the level of common sense: the latest results, the form of an athlete, and so on. With binary options, this number will not work. In order to successfully analyze the behavior of the market, you must have special knowledge. There are various options trading strategies that, with the proper level of professionalism of the trader, can bring a steady income. Brokers, for the most part, are only intermediaries between the trader and the real market, that is, in fact, they only take a certain amount from the loss.

How to trade options

So, now we can answer the question: "Option - what is it?" I would like to know how to profit from trading these assets. First, a few numbers: an average trader with a standard percentage of losing trades per day has about 100-200 dollars (provided that he is busy for several hours, most of which is occupied by market analytics and strategy selection).

Before opening trades, you need to familiarize yourself with technical analysis data. If you have an economic education, it will not be superfluous to understand the topic of fundamental analysis, which will increase profits at times. It is also recommended to have several trading strategies in your arsenal that are suitable for a specific market situation.

What is analysis

Analytics is almost the most important part of trading in financial markets. The golden rule applies here: “Measure seven times, cut once,” and sometimes one transaction can be preceded by many hours of calculations and adjustments. The options chart is studied, important economic news that can affect the situation is taken into account - and this is just a small list of what traders do for a successful transaction, the amount of which can be, for example, $ 1,000, and the yield will be about 80%. With one lucky purchase, he secured a monthly salary for a factory worker, and that in a couple of minutes! Of course, options with a short expiration time are difficult to analyze, and they bring the biggest profit.

Technical and fundamental analysis

As mentioned above, there are two types of analysis of the market situation - technical and fundamental. The first is advised to all beginners who are just taking their first steps in trading. Its data is given on public resources, which indicates which way the chart will go. In other words, technical analysis uses in its tools only information taken from the behavior of the chart. The second type is fundamental. The word itself suggests that primary sources are being studied that can explain this market situation. This work can only be done by professionals. Technical analysis is trusted in most cases to machines.

Strategies

It is easy to guess that there are many strategies for working on the stock exchange, but there are some nuances here too. Someone likes more aggressive trading, when one or two transactions can close income, while others, on the contrary, use a more conservative approach. It is worth saying that such models are not well suited for everyone. Each currency has its own behavior, which may differ from the others. The rating of options that fit well with various strategies has not been invented, but it is known that in a stable economic situation, the EUR/USD pair works very well with models.

Conclusion

So, binary option - what is it? We answered this question in the article, but touched on this topic only slightly. For the world of financial markets is so vast that to studyits completely impossible. But it's not hard to learn how to profit from it - a little hard work and success awaits you.