RANGE

Range is the third type of binary option offered by OptionBit. Based on tunnel trading, Range options have a predetermined upper and lower boundary. When buying a range option, the trader must predict whether the price of the underlying asset will stay “In” or go “Out” of a predetermined range at the time of expiration.
This way the trader can trade on the volatility of the asset – If he or she thinks that the asset volatility is high, he or she can buy an “Out” of the range option. On the other hand, if the trader thinks that the option is not volatile, he or she should buy an “In” range option.

Trading Example
You decide to trade a forex option, USD / EUR. In the trading room you see that there are two options available, “In” and “Out”. Each option has a predetermined range and you must determine if the asset will be in the upper or lower range at the time of expiration.
You think that the price of the underlying asset will be in the range at the time of expiration so you select an “In” option. If you thought that the price of USD / EUR will be out of the range at the time of expiration, you should have bought a “Out” option.
If when the contract expires the price of USD / EUR stayed in the predetermined range that you selected, you’ll get a high return on your investment between 75 – 81%.

TOUCH OPTIONS

Touch options are another type of binary option available on OptionBit. Touch options expire in-the-money if the price of the underlying asset touches a predetermined barrier by the time of expiration. Price barriers can be higher or lower than the current price of the underlying when the option is purchased, enabling traders to take advantage of the traditional omni-directionality offered by binary options.
OptionBit also offers variations on Touch, including “Touch Up” and “Touch Down”.

Trading Example:You decide to try touch trading. After looking at the assets available, you decided that you would like to trade a touch option on Microsoft.

In the trading room, you select Microsoft as the asset you would like to trade and see that the option is expiring in 30 minutes. Depending on the current price of the asset, two options are available with predetermined strike prices, “Touch Up” and “Touch Down”. You believe that the price of the underlying asset will touch the high strike price until the expiry date, so you select “Touch Up”. On the other hand, if you believed that the price of the underlying asset will touch the low strike price, you would select “Touch Down”.

If when the contract expires the price of Microsoft has touched the option you selected, you’ll finish in-the-money and take home a high return between 75 – 81% of your initial investment.

ABOVE-BELOW

Above / Below is the most popular type of binary option and the one that the majority of traders are familiar with. Based on “cash-or-nothing”, Above / Below binary options expire in-the-money when the trader correctly predicts if the price of the underlying asset will move above or below the predetermined strike price by the time of expiration.
Like with all binary options, payouts are known from the onset so that traders know where they stand before buying the contract. When trading with OptionBit, traders can get a high returns between 75 – 81%.

Trading Example :
You decide to try trading Above / Below options and sign up for a free account. After looking at the assets available, you decided that Gold is the asset you would like to trade.
By quickly looking at the historical graph that day and conducting a technical or fundamental analysis, you notice that Gold is currently trading at a low point for the day. Based on this information, you decided that this low point is a lull rather than a continuing drop and you think that Gold will finish higher than it’s current price in one hour.
Since you believe that price of the underlying asset will increase, you buy a Call option that expires in 60 minutes. If you believed that the price of the asset would decrease, you would buy a Put option.
Since it’s your first time trading, you decides to start with a small investment of $100. If when the contract expires the price of Gold has risen, you’ll finish in-the-money and take home a high return between 75 – 81% of your initial investment.

TYPES OF BINARY OPTIONS

While there are several different types of binary options, the most popular form of binary option is above / below options. As the name of the instrument implies, there are two possible outcomes when you trade above / below binary options–win or lose.

When trading above / below options winning or losing depends on if you can accurately predict if the price of an underlying asset will increase (above) or decrease (below) by the time of expiration. If the trader believes that the price of the underlying asset will be above the current price by the time expiration, they will take out a Call option. On the other hand, if they believe that the price of the underlying asset will go below the current price by the time of expiration, they will take out a Put option. The option will be in-the-money and the trader will receive a high return between 75% – 85% on their initial investment if they predict the direction of the option correctly.
There a few important differences between traditional options and above / below options. With traditional options, the intrinsic value of a Call or Put increases as the price of the underlying asset goes deeper in-the-money. However, with binary options, the degree to which the underlying asset’s price is in-the-money does not affect the payout. Unlike traditional options, binary options cannot be sold or exercised before they expire. While owners of traditional option contracts can take delivery of underlying assets like stock shares and commodities, binary option traders never actually buy the underlying asset, but simply buy an option on which direction it will move.

There are three majors types of binary options, Above / Below, Touch and Range. Traders can achieve great flexibility with their trading by exploiting the unique characteristics of each type

EXPORT AND IMPORT DATA

Import and export information for large consumer and producer countries affects every market: the stock markets rise or fall based on the prospects of producing companies, the Forex markets respond to what the information shows about the strength of a domestic economy, and commodity markets swing wildly based on what the information demonstrates about demand for raw materials. That’s why it’s essential for binary option traders to make sure that they keep their eye on import and export information.

The effect that import and export data have on the Forex markets is perhaps the most subtle, and most intriguing, of the fundamental relationships. Large producers and consumers can drastically affect currency value based solely on their import and export activity. This is because when buying or selling to another country the home currency of the producer is generally used. For example, one can imagine an enormous car manufacturer in the United States selling $5 billion worth of automobiles to the United Kingdom. In order to purchase that order, the importer in the United Kingdom will have to exchange a comparable amount of Pounds (GBP) into US Dollars (USD). This in turn will shift the supply/demand equation radically.

Import and export data from the world’s developing economies also have a huge impact on the commodities markets. This is because these countries consume a highly volatile and sometimes massive amount of raw resources – as opposed to established economies, which tend to consume roughly the same amount year to year, with a regular growth rate. When a country like India or China releases export data that shows a massive spike, the price of commodities such as Steel, Oil, and Gold may all skyrocket, as the nations’ demands for the raw materials needed to increase production levels will grow. Similarly, when export data shows a slowing of production, the commodities markets tend to get spooked, as a slowdown in any of the major growth economies could seriously impact global demand for underlying resources.

SUPPLY REPORTS

Although modern markets have added extra layers which distort the natural market somewhat, at their cores the markets continue to be driven by the law of supply and demand. This is especially true in the commodities markets, and traders of those markets look closely at supply and stockpile reports, which reveal the current relationship between a commodity’s supply and the demand for it.

One of the most important supply reports from a market perspective is the Energy Information Administration (EIA) weekly report on various energy sources: petroleum, natural gas, and coal being the most market-applicable. The publication, This Week in Petroleum, is a must-read for any serious energy commodity trader because it contains current supply and stockpile data for coal. Each month the agency also releases Petroleum Supply Monthly, which contains inventory data for petroleum products.

Supply reports are important not simply in how they relate to data given in previous reports, but in how they relate to analyst predictions. In fact, data released in the previous week or month is generally supplanted rather quickly in the market by guesses as to what the next report will reveal. The market then reacts to these predictions, and when the next report is released the market swings based on how accurate those predictions were – if predictions were for greater supply than turns out to be the case, commodity prices will swing upward; if there turns out to be a greater supply than predicted, commodity prices will swing downward.

While energy commodities are the most visible to use supply data, in fact agricultural commodities tend to depend on them much more. While energy commodity supplies are generally relatively stable – excepting drastic events like hurricanes, or the discovery of new reserves – supply levels of agricultural commodities can be radically altered overnight. Heavy frosts can destroy half the orange crop in Florida, causing the price to spike overnight, and good weather can cause bumper crops, which will result in high supply reports that drive the commodity price down.

INTEREST RATES AND EQUITIES

Countries with strong Central Banks that adopt hands-on approaches to their currency valuations have the ability to drastically impact the markets through a very simple device: the raising or lowering of interest rates. This gives them a measure of fine-tuning over the markets that can help stabilize a country, impede inflation, or pull an economy out of a recession or stagnation.

At its most basic, the relationship between low interest rates and equities is easy to understand: it’s about a risk to profit ratio. Government bonds are extremely safe investments; short of a government collapse, or a total loss of economic stability in the country, they will always pay out at the rate they are given. Equities, on the other hand, have varying degrees of risk that are always greater than a government bond. The reason that risk is acceptable is because the potential for profit is so much greater. The attraction of equities to low- and mid-risk investors is therefore directly attached to the gap in profitability between bonds and stocks.

When interest rates are at 1.5% or 2%, for example, option bonds may be attractive to low-risk investors, even though they would almost certainly be out-performing that return with a good portfolio in the binary option  market, so long as the market as a whole was seeing some upward movement. When interest rates rise above 2% they become attractive to an even broader group of investors. When large investment funds start moving into bonds, the repercussions for the stock market can be quite noticeable, with equities suffering across the board.

Conversely, when the government brings interest rates down to 0%, any attraction they may have for all but the most risk-averse investors vanishes entirely. As a result these investors are forced to move into higher risk investments, and the equities market tends to reap the largest share of this gain.