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Trading Binary Options: Strategies and Tactics by Abe Cofnas

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Introduction

What Are Binary Options and Why Are They Important?

Let’s get right to the point and answer the question: What are binary options? Binary options are a type of option instrument that provide a fixed deadline for expiration, with a fixed payout. Basically, it is a yes or no bet. Specifically, the bet is on whether a settled price of an underlying market will be at, above, or below a target strike barrier, by a defined future time. For example, on a Monday morning, the trader is trying to answer the question: Will the S&P be at 1350 by Friday at 4 p.m.? If the trader anticipated this outcome, and turned out to be right, the payoff using the North American Derivatives Exchange (Nadex) binary options would be $100 per unit. If another ...

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