The two outcomes of binary options are always opposite, so they cannot happen at the same time. Because of this, they are also called two-way options.Since they are very simple, binary options have become the most popular type of financial options, and every year more traders engage in binary trading. They can be described as bets on the market outcome, and they can generate a win when the option finishes in the money or a loss when it ends out of the money.The way the binary option works is very simple: if you think the Asset value will go up until the Option Expire time, you should buy a Call option. If you think the value will go down, than you should buy a Put option. In the above image, the Call button was clicked, so the right side of the box shows the details of buying a Call option. It shows the expiration date, the current rate, the amount to be invested in the option (here you can fill any amount between the minimum and maximum allowed by the broker) and the payout if the option expires above the current rate, and below the current rate.The binary options brokers will sometimes offer a refund when the option is a loser on certain assets. This refund can be as high as 15 of the investment, but when there is a big refund you can expect to see a smaller payout if the option is a winner.In order to buy digital options you need to open an account with a specialised broker, the same way you would need a stock broker if you wanted to buy stocks. This process is very easy and takes no more than five minutes. Binary options brokers operate online and you will be able to fully manage your account just from the internet. You dont need to personally go to the brokers office in order to open an account, and you can fund your trading account using your credit card or other convenient methods like wire transfers or online payment channels like Moneybookers or Neteller (also known as Ewallets).If you want to find the most suitable broker for you, we strongly recommend you to check our binary options brokers section where you will find detailed information about the top five brokers. We have gathered all this information for you in order to help you make a wise decision when choosing the broker.But like other binaries, Nadex binaries can be held until expiration and will settle either in the money or out of the money. In addition, they do not just offer one at the market binary per expiration but offer binaries at multiple strike levels for each expiration.For example, if you bought the US Tech 100(NQ) 3620 4:15 PM on 4/21/2014, then what does it take for it to settle in the money By buying the binary, youre stating that this statement will be true at expiration, that NQ will be 3620 at 4:15 PM ET.The US Tech 100 follows the NQ CME NASDAQ 100 Emini Futures. The settlement price is calculated by taking the last 25 trades right before expiration and the average of the middle 15 of those 25 trades to reach the settlement price. In this case, since the binary expires at 4:15 PM ET, the settlement would look at the last 25 trades on NQ and average the middle 15 trade prices right before 4:15 PM ET.At settlement, since you were in the money, you would receive an email stating your payout is 100 per binary contract. Payout and profit are different. On Nadex all trades are fully collateralized. So, if you put up 50 to buy the binary and you received a payout of 100, then your profit would be 50.At settlement since you were in the money, you would receive an email stating your payout is 100 per binary contract. Payout and profit are different. On Nadex all trades are fully collateralized. So if you put up 50 to sell the binary and you received a payout of 100 then your profit would be 50.To simplify the process of calculating profit and loss, you can use the free live data binary scanner available at ApexInvesting. It will show you the profit and loss on a binary contract and the risk and reward as of expiration. It can also show you a simulation based on a move in the market to a specific price at that moment.This is a huge advantage over other option contracts and many other types of trading. Even if you trade 10 contracts in a single order, your fee will be 9.00. If you place 100 contracts in the same order without changing the price, the exchange fee will still only be 9.00.If the trade expires out of the money with no value, then there is no fee at settlement. If the trade expires in the money, then the fees are the same as if you had exited before expiration. The fees are 0.90 a contract for settlement and the fees again are capped at 10 contracts for a maximum of 9.00 for a single position on the same contract at settlement.Some over-the-counter binary bucket shop brokers will claim they have no fees. However, they only pay out 70 or 80 on a 50/50 probability trade. On a 50/50 probability trade, the Profit/Loss should be 1:1 less bid/ask spread and fees. So if you can only make 70 on a 100 risk, then the fee or spread in essence is 30, whether you are profitable or not.Nadex has in the money trades with higher probability and out of the money trades with higher payout as well as at the money trades. In addition, Nadex is a fully regulated exchange making its income through simple exchange fees like any other exchange.What are binary options exactly A binary option is a relatively new, simple investment vehicle allowing traders to bet on price behaviors in underlying assets. It differs from a traditional stock or stock option purchase in that the investment amount is fixed, the payout is fixed, and the price action (the win/loss trigger) acts within certain, simple parameters. Binary options are also known as all-or-nothing options.An Option is a thing that is or may be chosen. In traditional options trading, an option is the right, but not the obligation, to buy or sell an underlying stock, commodity, currency, index or debt at a specified price during a specified period of time. The specified price is the strike price, and the end of the period of time is the expiry. Trading options are a simple idea, but complicated in practice. You can do many things with a traded option, including for example to exercise it and buy or sell the underlying asset.
