Spread Betting vs. Binary Options
Spread betting and binary option are the two popular forms of trading. They are popular by their profit-making potentiality and also a short-term capital investment. Both of these provide flexible and high leverage facilities. Both of them have some unique differences. In this article I am going to point out the differences between these two trading platforms.
Spread Trading: Spread betting is a form of trading of assets or properties, shares or a commodity and more. It is a derivative technique where investors do not own the assets or properties, they simply speculate on if the asset’s price will up or down. In spread trading, an asset contains two different prices. One is the selling price and the buying price. And the difference between these prices is known as the spread.
Binary Options Trading: Binary options trading is the estimation of asset performance within a given time frame. Binary options have only two options. One of them is “put” option and another one is “call” option. If the price will rise (your prediction) then the investment is named as the “Call” option. And if the price will fall, then the investment is named as the “Put option”. In binary options, you can trade with indices, forex, commodities, stocks or more.
Spread Betting and Binary Options: Differences
Risk: The risk of Spread betting is very high. There is a possibility to lose the entire investment if the market movement goes down. But there is also a possibility to earn huge if the market movement is in your favor. In binary options, the risk is very low compared to spread betting. If the market falls, then the investor will lose money only for that particular option.
Availability: Binary options is growing high. In most of the countries binary options is available. It is widely used trading among he traders. But spread trading is not widely available as like binary options. It is prohibited in many countries like the USA, Japan etc. It is considered as a betting system rather than trading.
Complexity: Spread trading or betting is easy to understand. In this system, it is very easy to calculate the initial investment or profit. In fact, it is considered as a betting not a trading or investing. So, there is no need to give tax for the betting. On the other hand, binary options is considered as an investing strategy, so you need to give tax according to your investment and profit. The complexity of binary options is higher than the spread betting.
Financial function: In spread betting, you don’t need to fill tax or you don’t have to pay for any service. But there are several costs are associated with binary options trading. You have to fill tax and other trading related costs like broker service fees or binary trading software fees.
Spread betting and binary options trading, both of the have same intensity to gain profit against the initial investment. If you are serious about your capital and cost about trading, you can easily choose betting. But the risk of betting is higher than binary option. If you don’t want to take the risk with your investment, you can simply choose binary options. Both of them will be good for you if proper strategies have been followed.