Payouts for binary options are published as percentage values. These values indicate how much of your investment you will win additionally if you your binary option. That means, if your trader is willing to give you a payout of 75 percent for a option, and you invest $100, you would get your initial investment back ($100) and a an additional payout of $75. Learn about binary options payouts in this article where we will try to deal with the question; How does binary options payouts work?
It is important to understand that, in the binary options system, the payout only indicates the amount you can win. Most other payouts – for example in betting, casino games, and gambling – include your investment AND your earnings. Therefore, what is displayed as a 75 percent payout in binary options equals a 175 payout in most other payout systems.
Investors that are unaware of this significant difference might consider binary options to be relatively unprofitable, even though they are just using the wrong value for their calculation.
When you look at your trader’s trading platform, you will likely see both directions you can invest in accompanied by the payout your trader is willing to pay. If you choose to invest, this payout is guaranteed if you win your option. Some brokers offer additional tools to influence the payout after you invested. Some allow you to double your investment once you feel that you are likely to win the trade, or back out of a trade you think you will lose.
Most of the times, these additional tools come at a cost, and are not worth the additional effort. If you like the plus of control, however, you should look for a broker offering these tools.
Continue reading below the table on How does Binary Options Payouts work.
In binary options, the payout your broker is willing to pay depends on the market situation. In some cases, payouts can vary substantially between market situations. If you are investing in high / low options, for example, do not be surprised to see a payout of 65 percent on one investment, and a payout of 85 percent on the next investment.
Also, payouts differ greatly between option types. Generally, high / low options are considered to be the least risky option type. Therefore, they offer the lowest payouts of around 75 percent. Touch options and boundary options, on the other hand, are considered more risky. In return, they offer higher payouts around 200 to 300 percent, in rare situations even up to 500 percent.
For a trader, it is important to understand that these different payout require vastly different trading strategies. A strategy regularly generating payouts of around 300 percent can afford to win a significantly lower part of its trades than a strategy with an average payout of 75 percents.
One of the biggest factors in getting good payouts is your broker. Payouts also differ greatly between different brokers. To make sure you get the best payouts and set yourself up for success, you should regularly compare your current broker’s payouts with the payouts of its competitors. If you find a broker that offers you better payouts, switch brokers.
One of the biggest advantages of binary options is that you as trader will always know exactly what you are getting into before you invest: Your binary broker will always display the payout you will receive if you win your option before you invest. Compared to regular assets, this is a huge difference. Theoretically, with regular assets, every outcome is possible. With some leveraged investments you could even lose more than you invested.
With binary options on the other hand, you cannot lose more than you invested. But you can easily win as much as with other assets.