Binary options also called digital options or fixed-return options (FRO) are a simple way to trade price fluctuations in a wide range of financial markets. Binary options have different profits, costs, risks, liquidity structure and investment processes than the traditional (vanilla) options. The key distinguishing features of binaries are:
- Easy to trade — simple and straightforward to understand;
- Predetermined payouts and risks — unlike a traditional vanilla option, the possible gain is binomial, predefined and works as "all-or-nothing";
- Payouts — In-the-money contracts yield returns up to 90% of the paid premium/contract amount;
- Payout/Refund trade-off — traders may select between a set of combinations for a better match to their risk tolerance or trading strategy;
- Small trading amounts, low deposit required — binary options contracts/premium with Dukascopy Bank start from as low as USD 1;
- No commissions — Dukascopy Bank charges no fees in addition to the premium paid by the trader;
- Numerous strike prices and expiry dates — for call/put binary options the strike price is the price at the start of the option contract.