Are Binary Options considered Investments? Let’s begin answering the question by thinking about what investments actually are! A financial investment is an asset to which you attach some of your capital, based on the belief that the value of that capital will grow. For instance, a fixed rate Bond or a share of a company’s Stock. An investment strategy is your plan of action which guides your investment decisions towards your individual goals. An investment strategy concerns risk management, asset allocation and buy and sell guidelines.
Most of the ordinary people around the world today haven’t even heard of binary options. Devised less than ten years ago, in 2008, binary options are still relatively new on the financial markets’ scene. If asked to think about investments, people in general are more likely to think of things like savings accounts; pension funds; stocks and shares; real-estate and gold, and binary options are probably unknown to them. We are living in turbulent political and socio-economic times and the winds of uncertainty are buffeting the stability and reliability that people have long associated with the more traditional forms of investments. Now is the time when binary options is beginning to be seen as a real choice for investors.
What are Binary Options Investments?
As the name says, there are two sides to binary options. One is the ‘CALL’ option, and the other is the ‘PUT’ option. A binary options trader does not buy or sell anything. He or she speculates on the movement of the price of a specific asset within a stated time-frame.
You make a decision whether to place your money on a call or put option based on the information relating to an asset’s price performance. For example, if I believe the price of gold will rise by the end of the month, I make a decision to invest some of my capital on that eventuality and I place a ‘Call’ Option. At the expiry of the contract, if my choice was correct, I will be ‘in-the-money’. This is just jargon of course, and the other outcome that I chose incorrectly means that at the expiry I am ‘out-of-the money’.
Totally unlike other forms of investment, the return from a successful trade is usually more than 70% and often up to 85%, and this is known at the very moment the call or put contract is placed.
Contract timeframes vary from fractions of a minute to months. Which timeframe you actually choose is determined by your belief about the trend direction of the price movement. You choose your binary option contract timeframe based on all the information you have about the asset you are focusing on.
Where can I make money from Binary Options?
Everything you need to know can be found on the Stern Options trading platform. If you have questions to ask about the trend in an asset’s price, you can consult the Stern Options account manager or Stern’s customer support team. The increasing popularity of binary options is giving rise to new brokerages being established every year. Naturally you must do your market research and find the best company to partner with. I recommend Stern Options for many reasons. First of all, their trading platform is second to none. Secondly, they provide fully comprehensive free-to-use online training. Thirdly, Stern’s team of financial analysts have a combined experience of over a hundred years in this industry. All together, these things add up to great partnering experience and have made an immense difference to my investment strategy.
We are living in a world of low interest rates, meaning basically that a savings account is not the surest option for an investment portfolio anymore. Stock markets are volatile, meaning fortunes are lost and won without the average investor ever having even a notion that that sort of risk is involved. Also real-estate, a stable investment normally, it has quickly become a liability for investors as the 2008 financial crisis has shown. More and more people today are coming to think about binary options trading. This represents the thinking investor’s response to current uncertainty for potential investors. As well as the reflexes of society in general to seek the best option out of things.