What are Call and Put Options?
Introduction to Call-Put Trades
Those who are familiar with binary options, they definitely know these two terms ‘Call’ and ‘Put’ in binary options trading. They are also known as ‘UP-DOWN’ trades or ‘High-Low’ trades. These terms are the main or core parts of the binary options trading platform as well as the whole binary options industry.
In binary options trading, the average payout rate is 78%, however many brokers offers high payout rate compared to average payouts. Some brokers offer payout rate up to 93%, which means if you invest $100 in a single trade and if the prediction is correct of the particular trade then you will get $193 I returns.
How to Place Call/Put Trades?
Basically, these kinds of trade are very simple to place or purchase. Just you need to select an asset first. You can select assets from four different categories: Stocks, Indices, Commodities and Currencies.
After successfully selecting your asset, you need to predict about the asset movement. You have to choose an option ‘Up’ or ‘Down’ from the strike price. And, the strike price is the price the asset is selected at which sets the line for the rest of the trade.
If your prediction is correct then your trade will be ‘In-The-Money’ or if your prediction goes wrong then it will be considered as a loss and the trade will be ‘Out-Of-The-Money’.
What is CALL/PUT option?
Call: This option is taken while the prediction of the asset will rise above the bid or strike price at the end of the trade or expiry time.
Put: This option is taken while the prediction of the asset will fall above the bid price at the expiry time.
The market movements of a trading market are volatile, which means uncertainty. There is no exact or steady market condition. You will experience up and down of the market. Binary options are based on market movements which means the CALL/PUT options. So, you need to know about the current market caution before placing a trade ‘CALL or PUT’.
Short Term Options
Binary options is considered as a short term investment trading, however you can also trade with long expiry time. You can choose the expiry time between 60 seconds (if you want to go short) or minutes or hours or even a week.
Binary Options is known as FRO, which means you know exactly what the payout for each trade will be when the trade is taken and the result works in both ways.
With Binary Options you will never lose more money than you initially invested in the option. If the prediction goes wrong then you will lose only what you have invested. To gain profit, you have to predict the asset movement correctly. And that’s why you must have to know the market trend. After knowing the market trend, you can predict the asset’s movement properly.
Binary Options has a great advantage that, you can invest any amount in your CALL/PUT trades. However, there is a strike price to determine the actual value of an asset. But he investment amount is not fixed or there is no limitation on investments.
Price and Payout Changes
As a day trader you’ll need to pay attention to what you are doing while you are placing a Call/Put Trade. The bid price is fixed by brokers and you must have to follow the strike price as well. Binary options is also known as FRO – Fixed return options, which means the payout rate is fixed. You will know the payout while placing the trade.
Binary options depends on CALL/PUT options. Before placing any CALL/PUT trade, you need to research the market to predict the assets movements.