Let us look Binary Options

Up to 71% yield in an investment. Risk Warning. Trading in options is very dangerous. You can make 65-71% of in the money options or lose 85% of the out-of-the-money trade. How to do this now practically? I put e.g. 100 € for the rise of a value (call) over a strike price at a later maturity date. In a few days, hours, minutes or even seconds. If the price at the expiry time is above the base price, then you get back between 165 € and 171 €, it lies underneath the value. It guarantee a refund of € 15. The same applies if I set traps on the value (Put).

The loss guarantee

With the loss or refund guarantee differs the basic principle of binary options. Even if the underlying is moves in the wrong direction, the buyer will receive back 15% of its use. This loss of warranty /what a fitting name / is good, because you could have won. If you invested 85 € instead of 94 income – would be won 101%. Let us look at the roulette game. A simple chance as Red or Black features 100%, 200% and a double chance a simple number even 3,500% profit. Ensure an easy chance to win even in the probability 18/37 = 48.6%.

The gain in the Binary Options approximately equal to easy chances at roulette. At roulette systems, we have seen that in the long term, the Bank 2.7% of wagers on multiple wins and 1.35% on simple chances. It is not much, but it is a drop in the bucket!

The height of the potential yield is meaningless

Without the probability that a value to rises or falls, a maximum yield of 71% is saying very little. Now probably you cannot decide easily, just as in roulette on red and black, in the same time it rise and fall. So 50 € on climbing (call option) and 50 € on falling (put option) – a total of € 100. The price goes up; you get € 85.50 for the call option, and € 7.50, as a loss guarantee for the put option be refunded – together € 93. If the value, then you receive € 85.50 for the put, option and paid € 7.50 as a loss guarantee for the call option back – together € 93. It is no matter what happens you get € 93.

One moment! You had invested € 100. Why missing 7 € or 7%? These transaction costs, we can also get in any other way. If 71% of profits are high or not hinges on the probability with which we can predict rise or fall. At 100 € and use a 50:50 chance with our expectation would be € 71 * 0.5 – € 85 * 0.5 = € -7. Therefore, to generate transaction costs, so we have a greater than 50% accuracy to predict the price movement.

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