Types of Binary Options Contracts
When people refer to trading with Binary Options they often think this form of trading is restricted to higher and lower trading calls. While this was once the case, the industry has quickly reacted to demands from traders. As a result there are now even more ways in which you can speculate and profit from fixed odds trading.
The original binary option contract, also sometimes called the ‘vanilla’ contract does indeed follow the widely recognized ‘higher/lower’ concept. This Call and Put (higher/lower) contract pays out if you able to forecast whether the price of an asset will finish ‘higher’ or ‘lower’ than the entry price at expiry.
More recently more sophisticated contracts have been added to many binary trading brokers lineups, allowing a greater range of ways in which to trade with binary options.
These contracts offer many of the same advantages associated with this method of trading and also succeed in broadening the trading experience. This will help to satisfy the requirements of most traders.
Here is a brief overview of each contract type offered. You will find more detail by clicking on the link at the end of each short description.
Otherwise known as the ‘Higher / Lower’ or ‘High/ Low’ option. This is the original or ‘classic’ binary options contract. Trades set using this contract can be set to expire over a range of time periods. They pay-out if you can forecast whether the asset price will finish ‘higher’ or ‘lower’ than the entry price at expiry. Read more
This is the most common of the Touch trades. Here you specify a level in the market that you believe won’t be ‘touched while the contract is live. The pay-out is made provided as the level is not touched over the duration of the contract. Some brokers also offer the ‘No Touch’ trade which is essentially the reverse of this concept. Read more
This is also sometimes referred to as the ‘Range’ contract. Here you set an upper and lower range that you think the price level won’t touch over the contracts duration. You profit if neither of these levels is touched. Some brokers also offer the option to profit from defining a range that you think the price will end up outside of at expiry. Read More
60 Second Option
The sixty second option is often marketed by brokers as a distinct contract but in fact it is just a very short term Call Put binary options contract. As the name suggests it is set to run for just 60 seconds in the market. This contract was originally pioneered on the SpotOption trading platform. It is now offered by most binary options brokers. Read More.
The Pairs option contract is a relatively new contract where you can profit from correctly predicting the out-performance between two different assets. Normally the assets will be from the same asset class, although this is not strictly always the case. Read More.