Buy Low — Sell High with Binaries
If you are trading futures, options, foreign currency or even equities today, you’re always on the lookout for a new way to possibly enhance your returns.
My name is Dr. Robert Dubil (aka Dr. Bob). I am the Chief Strategist for HedgeStreet and also Associate Professor of Finance at the University of Utah. My background includes having been Director of Risk Analytics Technology and Senior Strategy Consultant for Merrill Lynch. And during my career in the financial markets, I’ve held numerous positions related to options and derivatives trading for firms such as Chase Manhattan Bank, Nomura Securities and Union Bank of Switzerland.
In this article I’d like to teach you about new way to trade called Binaries.
Binaries are simple contracts that have only two possible outcomes. If you are correct about a price being reached or an event occurring you receive the full value of the contract. If not, you lose the amount you paid for that contract. You can also take the position that a price or event will not occur with the same payout structure. All U.S. exchanges where binaries are traded are subject to regulatory oversight by the Commodity Futures Trading Commission (CFTC), an independent agency with the mandate to regulate the sale of commodity and financial futures in the U.S.
The allure of a Binary contract is the ability to possibly make significant returns on small moves of the underlying.