You decide to purchase a $50 call option that will expire in two days via an online options trading platform. Binary Options have fixed returns so you know in advance what your payout will be Trade Fusion Review if your options expire in-the-money. In this case, the online options trading platform offers you a fixed return rate of 70%. Our binary options trading scenario continues with good news. Some 40 hours after your binary options purchase, the FDA approved the company's new product and the stock shoots up. Your option expires in-the-money, just as you predicted. Your return is $85. So at the end of the day, you risked $50 in options, received it back and earned $35 as a result of the fixed return options you purchased.
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Many traders new to binary options buying ask the question "Wouldn't I be making greater profits by actually owning stocks instead of buying digital options?" The answer is yes. If you had bought the healthcare and pharmaceutical company's stock in the example above, you could have made higher returns, but you would have had to risk more capital in order to get a significant payoff than when you trade options. With binary options, you can risk smaller sums of capital and still get a worthwhile payoff without putting too much at stake. In addition, there are some binary options platforms that will pay out a 15% return on out-of-money results, which is a significant advantage to fixed return options trading.
