Composition of Binary Options Trading
At the onset, there are 4 main
components of digital options trading: the investment amount, the expiry
date/time of the contract, the payout, and the purchase value of the asset. The
investment amount is the money the binary trader pays his broker at the
beginning of the contract. The expiration is the date and time the contract
will end and will serve as the deciding factor if the price of the underlying
asset has risen or fallen in comparison to the purchase value of the asset,
which is the initial price of the asset at the start of the contract. Lastly,
the payout is the amount of money the broker will pay the trader if he’s right.
In some instances, some brokers pay option refund to the trader. It is a
percentage of the investment amount returned to the trader if he makes the
wrong decision. This percentage is usually pegged at 15%.
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