Binary options, also called digital options, are a novel type of investment vehicle that are rapidly becoming a favorite among beginning investors because they have limited risk and are simple to understand. The most popular type is the above/below or high/low binary option and trading is fairly straight forward:

If you feel that prices will rise, then invest in a binary call option.
If you feel that prices will fall, then invest in a binary put option.

If you choose correctly, then you'll receive back your initial investment plus a return of as much as 81% of the investment. If not, then the most that you will lose is your initial investment. Better still, in some cases a small part (up to 10%) of your initial investment may even be returned to you. For example, say that you invest $100 in a binary call option on Google with payout 75/10. (A binary options has only two possible outcomes.) The price of Google at the time you buy the option is $544.67 per share. When the binary call option expires, if the price of Google is above this price, then you'll receive $175. If below, then you'll receive $10, meaning that the net loss will be $90.

Binary options typically expire in an hour, giving you the opportunity to earn a high return over a very short time period. And with binary options, the maximum return is earned even if prices move just one tick in your favor, so you can earn this return even when markets are relatively tranquil.

Binary options trading is available on the popular foreign currency exchange rate pairs, select commodities and even some of the more popular and active stocks and stock indices.

Click above to request our free Binary Options Trading Starter's Pack and receive: Personalized access codes to the binary options trading platform where you can watch prices live. Two binary options trading videos each showing a different trading strategy recorded in real-time from trade start to finish. Our in-house white paper on binary options which covers theoretical pricing. One-hour online tutorial on technical analysis which is useful for short-term trading. Plus, you'll find out how to receive one-on-one educational support and special financial bonuses.

ADVANTAGES OF BINARY OPTIONS:

Binary option trading has several unique advantages. The payout and risk of a binary option are known in advance and are fixed. The full payout is received even if prices settle just a little in the investor's favor. When trading binary options, there is no margin required, no commission expense and no risk of losing more than the amount initially invested. Binary options cash settle at expiration so there is no need to manually close a position. Binary options trading is done live usually over a web-based trading platform that allows the investor to watch prices on a tick-by-tick basis throughout the life of the option. Finally, a customer can invest in a binary option for as little as U.S.$30 allowing the beginner to trade with the thrill of actual money while risking very little.

CALLS on EUR/USD

At right is an example of an above/below one-hour binary call option on the EUR/USD foreign currency exchange rate. The option has a 70/10 payout*. In the example shown, this option started trading at 6:00 a.m. and can be bought at any time up to ten minutes prior to the option's expiration at 7:00 a.m., after which time a new option will be available for trading. The blue line shows the price history of the EUR/USD exchange rate over the life of the option thus far.

The EUR/USD current price is 1.3529. If the investor anticipates that, at option expiration, the EUR/USD exchange rate will be above the current price (the green shaded area on the chart), then the investor will click on the green CALL button to invest in the binary call option that locks in the current price. After so doing, the customer need only wait for the option to expire. If the binary call option expiration price is above the customer's locked-in price, then the binary call option will return the maximum payout, in this case, the initial investment plus 70%. If not, then the customer will receive 10% of the initial investment meaning that 90% of the initial investment is lost.

 
PUTS on EUR/USD

At right is an above/below one-hour binary put option on the EUR/USD. The characteristics of this option are similar to the binary call option in the example above but this time, the maximum payout will be earned if the exchange rate falls.

The EUR/USD current price is 1.3529. If the investor anticipates that, at option expiration, the EUR/USD exchange rate will be below the current price (the green shaded area on the chart), then the investor will click on the orange PUT button to invest in the binary put option that locks in the current price. After so doing, the customer need only wait for the option to expire. If the binary put option expiration price is below the customer's locked-in price, then the binary put option will return the maximum payout, in this case, the initial investment plus 70%. If not, then the customer will receive 10% of the initial investment meaning that 90% of the initial investment is lost.

CALLS on BP SHARES

Trading volume in BP (BRITISH PETROLEUM) shares has surged since late April, 2010 as shareholders react to continuing news events and developments surrounding the oil spill containment and cleanup. Yet there are many other investors, including those outside of the UK, who would like to participate in these trading opportunities yet do not want to go through the trouble of opening and funding an international stock trading account. Now, there is an alternative: Binary options on the BP share price (available during the regular trading hours of the European day).

At right is an example of an above/below one-hour binary call option on the BP share price. These stock options are available during the regular European trading hours.** The option has a 70/10 payout*. In the example shown, this option started trading at 6:00 a.m. and can be bought at any time up to ten minutes prior to the option's expiration at 7:00 a.m., after which time a new option will be available for trading. The blue line shows the price history of the BP share price over the life of the option thus far.

The current BP share price is 369.30 p. If the investor anticipates that, at option expiration, the BP share price will be above the current price (the green shaded area on the chart), then the investor will click on the green CALL button to invest in the binary call option that locks in the current price. After so doing, the customer need only wait for the option to expire. If the binary call option expiration price is above the customer's locked-in price, then the binary call option will return the maximum payout, in this case, the initial investment plus 70%. If not, then the customer will receive 10% of the initial investment meaning that 90% of the initial investment is lost.

 
PUTS on BP SHARES

At right is an above/below one-hour binary put option on the BP share price. The characteristics of this option are similar to the binary call option in the example above but this time, the maximum payout will be earned if the BP share price falls.

The current BP share price is 369.04 p. If the investor anticipates that, at option expiration, the BP share price will be below the current price, then the investor will click on the orange PUT button to invest in the binary put option that locks in the current price. After so doing, the customer need only wait for the option to expire. If the binary put option expiration price is below the customer's locked-in price, then the binary put option will return the maximum payout, in this case, the initial investment plus 70%. If not, then the customer will receive 10% of the initial investment meaning that 90% of the initial investment is lost.