Binary options brokers continue to grow in number each day, but the types of binary options are currently kept to a considerable number. The different binary options available can be divided into three major types. You can trade using the traditional ones or the more innovative ones, depending on your preferences.
Above/Below or High/Low option
This first type of binary options can be considered as the simplest one. All that you need to do is to predict whether a selected asset would move above or below the preset strike price by the predetermined expiration time. For example, if you choose to trade on silver, then you’ll need to choose whether the silver’s price will be below or above the strike price at the end of 5 minutes. If you choose “above”, then you’ll need to purchase a “call” option. Otherwise, you’ll need to buy a “put” option.
Unlike the Above/Below option, the Boundary/Range option requires you to predict whether an underlying asset would move “in” or “out” of a specified price range, by the end of the expiration time. Let’s say that you predict an asset would undergo a huge price movement. But you couldn’t predict the direction of its movement. Using this type of binary options, you can start an “outside” boundary option. You’ll profit, of course, when the asset ends up with a price that’s outside the predetermined price range by the time of expiry.
One Touch option
In the One Touch option, you’ll have to predict whether an underlying asset would “touch” or “not touch” the target price value by the end of the expiration time. Based on the rules of Forex trading, this type of binary options is suitable for new traders because it’s easy to learn. Moreover, if your chosen asset reaches the target price value even before the expiry time, then the trade ends and you instantly get your profit.