Binary options trading is a different style of trading that the regular trading. As the name suggests, in binary options trading there are only two options to select from call or put. The same options can be presented as Up or Down by some of the binary options brokers. In this article we will explain what a call option is and how you can make money by trading call option in the binary options market.
The call option is available in High or Low, 60 Seconds and 30 Seconds trading types along with the Put option. These trading types are the most traded by the binary options traders and hence are the most popular ones. This way Call options is one of the most frequently used option by the traders.
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A call options basically means up. It is used when the binary options traders feel that the price level of a certain underlying asset will rise in the coming time. Let us assume the price level of EUR vs USD is currently at 1.3830. Both EUR and USD are popular currencies and the option being discussed is related to forex.
Since such an option takes two currencies into account, change in either one of them will be reflected in EUR vs USD. If EUR rises or USD goes down or both happen simultaneously, the price of EUR vs USD will rise. Suppose a news comes into the picture which will weaken the USD or strengthen the EUR. In this case you know that the price level of EUR vs USD will rise.
This would be a perfect situation to use the call option for EUR vs USD. To use the call option, log into your binary options account and go to the trading platform. Now select the High or Low or 60 seconds trading and the click on EUR vs USD which would be present in the forex section. Click on the call options and enter the amount to be invested. Now select the expiry time if it is a High or Low option. For 60 seconds trading the expiry time will automatically be one minute.
A percentage figure will be shown corresponding to the EUR vs USD asset. It indicates that the potential payout and let us assume it is 80%. If after the expiry time, the price level of EUR vs USD is higher than the strike price which is 1.3830 in this case you will make a profit of 80% of the invested amount. However, if your prediction is incorrect and the price level is lower than the strike price, you will lose the invested amount.
Dynamics of call option in traditional trading
If the price level of an asset rises you will earn profit in the traditional trading style too. But the profit will be different. If the EUR vs USD rises by 10%, you will make the same profit in traditional trading while you will make around 80% profit in the case of binary options trading by using the call option.