“An option is a financial derivative that identifies a contract between two parties for a future transaction in an asset at a reference price.”
The buyer in this case has the right, not the obligation, to buy this option, although the seller is obliged to complete the transaction by selling it to the buyer. One option, in a nutshell, is actually an economic compromise between the two groups, whereby the two groups agree to enter into an economic contract related to a set number of underlying assets. This transaction includes the execution value or the value of the asset after the agreement has been fulfilled.
Below is an illustration: he bought a $ 3,000 option through a boy to get his $ 200,000 residency in three months. One week before the option expires, the boy discovers that the residence is indeed worth $ 1,000,000. Considering that he offered you the opportunity to get it for $ 200,000, you are contractually obligated to provide a residence permit at that agreed cost.
What are Binary Options?
Binary options work in a similar way. You will be able to get an iq options binary option from options brokers that are designed to be redeemed on a specific day, cash or some other type of property. The main difference here is that you are paid a fixed amount of the asset or practically nothing. Either you get paid or you don’t. This is why it is known as binary options, considering that you can only find two results. This is actually a very good illustration: you bought a binary option on ABC International stock for $ 200 with a binary payment of $ 2,000. If ABC International is trading at $ 200 or more on the expiration date of your option, you will receive a payment of $ 2,000. If you don’t work with that value, you won’t get anything.
Online trading platforms
Trading options hasn’t gotten easier these days. You will now find companies that offer options broker services and IQ Option binary options trading services through their websites. Interested people only need to connect, log into their chosen online trading platform, and close the deal. Everything with a few clicks. Be careful and cautious as a person has to study the stock market and the economic system in order to make the most of the options trading opportunities and generate very good returns.