Binary Options - Derivatives can provide consistent returns

There is no doubt that the spectacular collapse of the global financial services between 2007 and 2009 led to a type of investment product in the spotlight: derivatives. In all honesty, however, can be attributed to the banking crisis over the weakness of poor control (eg inadequate risk assessments) rather than a problem inherent to the investment vehicles themselves.

One thing is certain: you can never completely eliminate the risk of any investment. It can only handle. Even with derivatives, you can still achieve a high performance reliable until you get the right investment strategy. Binary options are a type of derivative through which you can get this back in line.

Binary options are one of the simplest products. By definition, this is a type of investment vehicle in which there is one of only two consequences depending on the accurate prediction of the future price of an underlying overcoming price of a specific 'strike' by a certain time in the future, when you buy the option. If your prediction is correct, you pay a predetermined fixed amount that is independent of the real asset value.

However, if the asset value does not exceed the strike price at maturity, you will receive no payment. And 'why binary options are also referred to as all-or-nothing options or digital options. Another commonly used term especially in the U.S. financial markets, the return is fixed Options (FRO). The nature of the underlying can be broad and could include equities, precious metals, crude oil or currency exchange rates.

When investing in binary options, there are three key factors that determine whether you lose or gain: the exercise price, expiration date and underlying asset price behavior. If you stay on the positive side of things with regard to binary options are concerned, it is necessary to understand these three factors. Of the three, understand and anticipate the behavior of the underlying asset price is probably the most important.

Binary options are a good way of hedging against adverse weather phenomena such as typhoons, hurricanes or high temperatures that have an impact on commodity prices. They are also used to protect investors from the effects of inflation or deflation. One of the reasons that make this type of derivative product ideal for a regular return is that your loss or gain is not dictated by the magnitude of price movements, but only for his leadership. Once the business hits the strike price, you know exactly how much money you are going to do.

This is very different from the price differential gain or loss on an investment in stocks or bonds. In these cases, if the price drops below the strike price, the investor will suffer a loss equal to the difference between the strike price and the price at maturity. The investor will not make a reasonable profit if the price appreciates and by a big margin. In this regard, the binary options carry less risk ....