A CALL option is where a trader believes that the price of a security will increase in value by the time the option expires. For example a trader would place a CALL option on EURUSD at a strike price of 1. This means that the trader expects EURUSD to trade above 1. If EURUSD does indeed expire with a price higher than 1. Depending on the return offered for the contract, the trader makes an appropriate profit.

The contract has an expiry time of So when a CALL or HIGH option is placed, the trader expects EURUSD to trade above 1.

If EURUSD does trade higher than 1. If EURUSD trades lower than 1. A PUT option is purchased when a trader believes that the price of a security will drop by the time the contract expires.

For example, if a trader thinks that EURUSD will drop in value, then a PUT Option is purchased. If EURUSD does trade lower than the price at which the option contract was entered, the option is deemed to have expired in the money and the trader therefore makes a profit.

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However, if EURUSD trades higher than the price at which the option contract was entered, then the option would expire out of the money, with the trader losing their invested amount.

The above picture shows a PUT or LOW Option. By purchasing the PUT option, it is expected that EURUSD was will lower than 1.

Trading an Option with Buy-Back or Early Close. Some binary options brokers offer an early close or a buy back feature. This is available on selected instruments and allows a binary options trader to close their contract before expiry. This can be used to minimize the losses. For example, if you placed a CALL option and the instrument started to trend lower, then the trader can close the option contract before expiry.

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This prevents the trader from losing their entire invested amount and settle for a smaller loss. The buy back or early close option is therefore a valuable additional risk management tool that can be used by the trader. The feature will not be available 10 minutes ahead of the contract expiry time. So traders should take note of this.

To conclude, binary option is very simple and easy to trade. With clear risks and rewards specified even before you enter a contract, a trader is torgavat how binary options in profit in control of their trades. Also by additionally using the buy-back or early close feature, a binary options trader can be able to control their risks even better.

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Trading Forex, Binary Options - high level of risk. Please remember these are volatile instruments and there is a high the secret of winning at binary options of losing your initial investment on each individual transaction. Home Forex Brokers Binary Options Brokers Trading Software Forex VPS Signals Analysis Other Tools Forex Education Forex Strategies BinaryOptions Education Binary Options Bonuses Binary Options Strategies Articles Humor ProfitF Write For Us Advertising Contacts.

Trading CALL Options A CALL option is where a trader believes that the price of a security will increase in value by the time the option expires. CALL Option — Example The above picture shows how a CALL option is placed.

Trading PUT Options A PUT option is purchased when a trader believes that the price of a security will drop by the time the contract expires.

PUT Option — Example The above picture shows a PUT or LOW Option. Trading an Option with Buy-Back or Early Close Some binary options brokers offer an early close or a buy back feature. The above image depicts a PUT option that was entered at a strike price of 1.

This trade has the following risks and reward: Your risk or losing amount is always the amount that you invested.

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The reward the amount you can profit is the percentage specified for the option. Binary Options Bonuses — What you should know.

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