Binary options are no backwater of the options market, argues derivatives educator Rick Thachuk. Rather, they are a growth product for retail investors that is about to take off – like retail FX trading a decade ago.
Binary options may still be an obscure product, but that does not mean they are abstruse or threatening. This simplified version of options in fact has advantages that make it more suitable for some users – perhaps especially for beginning investors in options.
Until recently they were hard to obtain, but a new generation of web-based electronic trading platforms, as well as several market innovations designed to simplify the trading decision, are generating excitement and activity in retail binary options trading.
Heads or tails
A binary option, also called a digital or fixed return option, has only two possible outcomes at expiry, each of which pays out a fixed value,...