Binary Options Trading – South Africa

Binary options are a particularly useful version of standard options trading. A binary option is sometimes called an “all or nothing” option, in that it pays out a set amount if the trader gets it right, but loses most of the trader’s money if they get it wrong. They are called “binary” because there are only two possible outcomes – a predetermined profit or a predetermined loss.

Binary options trading is just one of many types of advanced investment vehicles that are becoming more and more accessible. Costs are coming down, and markets are becoming more liquid, making it an excellent time to hop aboard the gravy train!

Binary Options Trading:

  • Advanced Investment Tool
  • Also known as “all or nothing option”
  • High risk and High Reward
  • Forex, commodities, stocks or indices can be traded
  • Outcome of binary option trades are agreed from the start of the contract
  • Easier to trade binaries as only a direction of asset value needs to be indicated.
24option
  • Designed for lower-intermediate to experienced forex traders
  • Wide variety of stocks, currencies, commodities and indices available to trade
  • Boundary, High/Low and One Touch instuments available in the 24option software
  • Proactive customer service
Trading Point
  • Trade forex, commodities and CFDs
  • Quick deposits/withdrawals even in South Africa
  • 20% first deposit bonus and 10% bonus on all subsequent deposits

What is Binary Options Trading?

The South African market continues to open up, both to domestic and international investors. One of the reasons South Africa is becoming a more attractive market is the development in higher-level financial instruments trading and over the counter (OTC) markets that is being led by banks and brokerages.

How it works is this: say you believe that the price of a certain stock, company ABC, will be 50 pips higher at the end of the next hour. You then take out a binary call option (call because you believe the price will go up) on this stock. The bet is this: you’re putting down $100 that says the price will go up, at odds that mean if you “win” you will be paid a 70% return on your investment.

A 70% return is possible because the options are, of course, geared by many times the underlying asset’s value (see “gearing” in the next section for more information).  This means that if, at the end of the specified time, the stock of ABC is 50 or more pips above the spot price (the price it was at when you bought the option), you get your $100 back, plus another $70. Not bad!

However, if you bet wrong, and the price does not meet the criteria for payout, then you receive only around 10-15% of your initial investment back. This sounds harsh, but if you compare it to other derivatives trading, where you can lose many times your initial investment if the market moves decisively against you, it looks pretty good. At least with binary options, you know what your maximum loss will be.