Binary options trading is a form of digital trading. In the digital world there are only two options 0 and 1. Similarly in binary options trading there are only two options as well and they are call and put.
Another interesting thing with binary options is that unlike regular trading you do not actually buy a stock. You just make a prediction regarding one of the binary options assets. What it means is that you can make money even if the price level of a stock is going south.
If you are a regular trader and you buy the Apple stock at 1.0000 and the price after some time is 0.9000, you will lose 10% of your invested amount. But the binary options trading has different dynamics. Even if the price level of a stock is going down and you have predicted the same, you will earn about 75% of the amount you invested. While you can’t make money in regular trading if a stock you purchased is going down, you can do so easily in binary options trading by using the put option.
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The put option
If you select the put option it basically means that you are predicting the stock of an asset is going to drop in terms of its value. The same option can also be presented as Down by some binary options brokers. Both of them mean exactly the same.
Trading using put option
For trading the put option, you must look for an asset which is likely to go down. If you are not a good price chart reader or you do not have subscription to a binary options signals service, you may try to go through the market news. If a company has given out some grim news and the shares are likely to fall, you can use this fact to make some quick money.
In order to trade the put option first of all you need to log into your binary potions broker’s account. Once you have logged in, search for the company’s name. If it has been listed by your binary options broker you will be able to find it in the stocks section.
After selecting the asset, select the put option. Selecting the put options implies that you are predicting that the price level of the stock selected will be lower at the end of the expiry time than the current price level. Set the expiry time and enter the amount you want to invest.
There will be a percentage payout mentioned alongside the stock. This number is usually between 65% and 90%. This percentage defines the profit you will earn if your prediction is correct. So if you made an investment of $100 and your prediction was correct you will make a profit of something from $65 to $90. However, if your prediction was wrong you will lose all the amount you invested.
Selecting the put option basically means that you are investing money on the prediction that the price of an asset will decline. You can earn money by using the put option in binary options trading.