Options Trading Details
In finance, a binary option is a type of option where the payoff is either some fixed amount of some asset
or nothing at all. The two main types of binary options are the
cash-or-nothing binary option and the asset-or-nothing binary option.
The cash-or-nothing binary option pays some fixed amount of cash if the
option expires in-the-money while the asset-or-nothing pays the value of
the underlying security. Thus, the options are binary in nature because
there are only two possible outcomes. They are also called all-or-nothing options, digital options (more common in forex/interest rate markets), and Fixed Return Options (FROs) (on the American Stock Exchange). Binary options are usually European-style options.For example, a purchase is made of a binary cash-or-nothing call option on XYZ Corp's stock struck at $100 with a binary payoff of $1000. Then, if at the future maturity date, the stock is trading at or above $100, $1000 is received. If its stock is trading below $100, nothing is received.
Options Trading
Options Trading
Options Trading
Options Trading
Options Trading
Options Trading
Options Trading
Options Trading
Options Trading
Options Trading
Options Trading
Options Trading
Options Trading
Options Trading
Options Trading
Options Trading
Options Trading
Options Trading
Options Trading
Options Trading
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