There are a lot of different investment strategies someone can use to get his or her money’s worth. However, one of the popular methods that’s garnered a lot of attention is binary options. They’re simple to understand, and they’re no more difficult to choose than any other sort of investment vehicle.
What Are Binary Options?
The simple explanation is that a binary option boils down to little more than a bet on a commodity. Say that you think gold is going to increase in value; to make money off that trend you would purchase a binary option that states gold will be worth more on a given date than a certain amount. If the date arrives and the amount on the binary option is less than the cost of gold, then the option pays the holder the amount of money it states. If the value is greater than the cost of gold, it pays nothing. That’s why they’re called binary options; there are only two, possible outcomes.
How Binary Options Work
Binary options are fairly straightforward. Take the previous example of gold, for instance. You might purchase a binary option for $100 which states that if gold is trading for less than a given amount on a certain date, it will pay $1,000. If gold is trading for more than the amount though, then the option pays nothing. Options can state that the commodity in question is more or less than a certain value, depending on whether the purchaser believes the value is going to go up or down.
How to Make Money With Binary Options
This is where things get tricky for many investors. If you knew what the value of a given commodity was going to be then you could simply get the appropriate option and wait for payday. A great resource for learning binary options is site called BinaryOptionsGuru. However, since there’s no crystal ball that effective the best strategy is to read and understand why the values of commodities change. If you can accurately predict the need for anything from steel to silver, then binary options are a good way to increase the value of one’s portfolio.
The best thing to do with binary options (and really any investment) is to look for arbitrage. These opportunities are when one can bet both ways on an outcome, thereby guaranteeing a profit. Crunch the numbers, and make certain the payments from the investment cover the costs, and make a profit.