Boss Capital is a financial binary options trading platform offering binary options instruments on a variety of underlying assets. These include indices, e.g. FTSE-100, NASDAQ, forex pairs e.g. EUR/USD, commodities e.g. Silver, Gold stock options e.g. Vodafone, Lloyds. Boss Capital offers One Touch and Boundary binary options, in addition to the traditional Call/Put options. Boss Capital also allows maximum liquidity to the trader by providing the possibility to close positions prior to expiry. Boss Capital offers a payout of up to 85 if an option expires in the money and up to 15 return if the option expires out of the money.Because of their all-or-nothing character, binary options offer traders a great way to trade on the direction of an asset or the overall market. And what makes binary options intriguing, besides their straight-forward risk/reward profiles and defined risk, is that they can be used for shorter strategies due to the hourly, daily or weekly expirations of the contracts.For a purely directional trade, lets use the US 500 Binary as an example. This is a contract Nadex offers which is a derivative of the E-Mini SampP 500 future and expires to a Nadex calculation of the last 25 futures trades just prior to the contract expiration.Looking at a screenshot from the Nadex platform, there are four different strike prices that have active markets that are below your target price of 1877.75 expiring at the end of the trading day today. Each strike will have its own unique risk/reward profile relative to the underlying market price and binary strike price.Assume you decide to buy the US 500 (Mar) 1872 for 68.50. All binary option contracts settle at 0 or 100 at expiration and it is important to remember that a binary option needs to be only .01 in the money for it to expire at 100. So essentially, your US 500 (Mar) 1872 contract needs to expire above 1872 in order for you to receive the maximum payout of 100/contract. If the binary expired at the strike of 1872 or below, your maximum loss would be your initial 68.50 cost/contract. In this example, even if the bullish move was not as strong as expected, provided the underlying market remains above 1872 at expiration the contract will settle at 100. Remember that all examples above are not inclusive of exchange fees.Another important point to remember is that you are in no way committed to hold your position until expiration when trading binary options. You can take your profit or cut losses early at any time before expiration if you would like to exit your trade.With binary options, you can buy or sell market direction using strikes which are out of the money, i.e. cheaper initial cost. If the underlying market goes higher like you had anticipated and finishes above the strike if you were a BUYER or at or below the strike if you were the SELLER, then the contract is valued at 100 per contract. (Note: when trading the outright market there is no cap to your profit potential but the binary choice offers a comfortable way to participate in the market with limited risk and potential positive return if finishing in the money.)If you believe the market will remain flat and trade sideways, you could trade binaries that are in the money. These binaries will have a higher initial cost which is proportionally more expensive and a lower return due to the capped payout structure at expiration. As long as the market remains flat, the binary is already in the money, so you want time to fly as the contract will be worth 100/contract at expiration. For example, if you paid 80 for the binary position (higher proportional cost out of 100), then your net profit, not inclusive of exchange fees, would be 20 at expiration.Traders can take advantage of binary options through numerous strategies on the Nadex exchange. Nadex is a fully regulated US exchange offering contracts on currency pairs (such as EUR/USD and USD/JPY), equity indices (such as US 500, Wall Street 30 and FTSE 100), energy (such as crude oil and natural gas), metals (such as gold and silver), agricultural (such as corn and soybeans) and events (such as jobless claims and Federal Reserve decisions).Binary options are based on a simple yes or no proposition: Will an underlying asset be above a certain price at a certain time Traders place trades based on whether they believe the answer is yes or no, making it one of the simplest financial assets to trade. This simplicity has resulted in broad appeal amongst traders and newcomers to the financial markets. As simple as it may seem, traders should fully understand how binary options work, what markets and time frames they can trade with binary options, advantages and disadvantages of these products, and which companies are legally authorized to provide binary options to U.S. residents.Binary options traded outside the U.S. are typically structured differently than binaries available on U.S. exchanges. When considering speculating or hedging, binary options are an alternative, but only if the trader fully understands the two potential outcomes of these exotic options. (For related reading, see: What You Need To Know About Binary Options Outside The U.S.)Eventually every option settles at 100 or 0 100 if the binary option proposition is true, and 0 if it turns out to be false. Thus each binary option has a total value potential of 100, and it is a zero-sum game what you make someone else loses, and what you lose someone else makes.Each trader must put up the capital for their side of the trade. In the examples above, you purchased an option at 44.50, and someone sold you that option. Your maximum risk is 44.50 if the option settles at 0, therefore the trade costs you 44.50. The person who sold to you has a maximum risk of 55.50 if the option settles at 100 (100 - 44.50 55.50).The current bid and offer is 74.00 and 80.00, respectively. If you think the index will be above 3,784 at 11 a.m., you buy the binary option at 80 (or place a bid at a lower price and hope someone sells to you at that price). If you the think the index will be below 3,784 at that time, you sell at 74.00 (or place an offer above that price and hope someone buys it from you).The bid and ask are determined by traders themselves as they assess the probability of the proposition being true or not.
