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Binary Options

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“Trading Principles in Exotic Options (Binary Options)”COPYRIGHT

Note : This presentation is directed to those investors, that are enthusiastic about financial markets , or general public that trough the use of investment tools like fundamental and technical analysis , a financial advisor or either an investment method are capable to determinate a market trend, for establishing an investment decision regarding a financial asset. This mean to have a good approach for knowing if the market will go up or down from its current value. This is very important, because this last statement is the bottom line for the creation and existence of Binary Options.

Definition: In Finance a Binary Option is a type of Exotic Option where the return can be either a fix return over the invested amount (profit) in a underlying asset (Stock, Index, Currency or Commodity) or nothing as a total payment. In Vanilla options cost is named premium in Binary Option is named Investment and it should be paid in advance. This Binary Options are use as a Directional Investment (regarding knowing the Trends in advance) in the Markets, either going UP ( Binary Call Options) or going down (Binary Put Options).

1. WHAT BINARY OPTIONS ARE ?1. WHAT BINARY OPTIONS ARE ?

Cross RateBinary Call Option

$

Profitfrom 67 % to 75% from total

amount invested

0

Investment ( premium)

Cost = Investment

$10.20 $10.80 $11.20OFOF

Risk = 85% or 100% of the Amount Invested

TO BE SUCCESSFUL TO BE SUCCESSFUL IN BINARY OPTIONS IN BINARY OPTIONS YOU MUST WIN 60% YOU MUST WIN 60% TO 70% OF YOUR TO 70% OF YOUR

TRADES . TRADES .

1.1 HOW TO TRADE 1.1 HOW TO TRADE BINARY OPTIONS.BINARY OPTIONS.

Supported by market Analysis tools (Fundamental, Technical or both) determinate the short trend that the selected financial asset will follow , determinate the investment amount and wait for the expiry time, which can go from 1 hour, 1 day or 1 week . If your predicted direction (market trend) is accomplished earn 65% to 71% profit over your investment.

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If you Think price will expire above the current level.

If you Think price will expire below the current level.

HOW TO TRADE

Demand (Bid) -- Rising Market– - Should buy –-Profit as prices goes up –-- CALL TO BUY = CALL

“ Very important, markets always moves ”

Supply (Offer) --Dropping Market – - Should Sell –--Profit as prices goes down –

-- PUT TO SELL = PUT --

1.2 MAIN DECISION TO TAKE IN BINARY OPTIONS: ¿MARKET WILL GO UP or DOWN?

Binary Options have being trading for a while as OTC (Over the Counter). In 2007 the Option Clear Corporation in USA propose trading rules for Binary Options In 2008 the Securities Exchange Commission approved the “Cash-or Nothing” listing. In May 2008 the American Stock Exchange launched also “Cash-or Nothing “ Europe binary Options. The Chicago Board Option Exchange (CBOE) in 2008 allowed Binary Options continual quotations .

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2. 2. BINARY OPTIONS BINARY OPTIONS TYPESTYPES. . Binary Options are CALL or PUT also known as :

ABOVE “THIS VALUE” OPTIONS orBELOW “THIS VALUE” OPTIONS

Profits in a Binary Option, is generally between 67% to 75% from the investment amount and just with little change movements in the selected trend, allowing the investor to receive its profit reward, this mean that the investor will profit just with small prices movements in the correct trend.

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HOW TO TRADE

2.1 PAYOFF TYPES – 2.1 PAYOFF TYPES – BINARY OPTIONSBINARY OPTIONS

Cash-or Nothing : This Binary Options payoff is a fix amount previously agreed between the parts, generally between 67% to 75% , if the option expires “In the Money” (inside reality). Weekly Binary Options payoff is up to 380%. Asset-or Nothing : This Binary Option payoff is a fixed value of a underlying stock or asset.

This is why Binary Options are named this way “BINARY”, they just have two types of results, either they paid a fix profit related to an investment amount or you experience a loss from 85% to 100% of your investment.

They also receive other type of names :

- All or nothing Options - Digital Options (real time Binary Options in Currencies and interest rates markets. - Fixed Return Options or FROS for Stocks Markets (AMEX)

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2.2 TYPES OF 2.2 TYPES OF BINARY OPTIONS: WEEKLYBINARY OPTIONS: WEEKLY ONE-TOUCH: They also exist one weekly binary option trades (from Monday to Friday = 5 days). You must analysis the financial asset of your choice buying it with the perspective that the price will go up (Call) or go down (Put). As it is a more extended term, the payoff generally will go from 150% to 380%. If the quoting price of the asset of your choice touch or gets trough the exercise price (floor in a “put” , ceiling in a “call”) you will get your profit and the binary option will expire at that moment. This mean that you have 5 days for your prediction to be accomplish up to expiration time where it will became worthless.

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2.3 2.3 BINARY OPTION BINARY OPTION CLASSIFICATIONCLASSIFICATION EUROPEAN : In this Binary Options, the value of the underlying asset (stock, index, currency or commodity) has to be “In the money“ at the expiry time to get the 67% or 75% profit. AMERICAN : In this Binary Options you get and automatic payoff (profit) in the exactly moment when the price TOUCHS de exercise price, this is known as “ONE TOUCH “ Binary Options. In this case the trader gets its profit when the market price of the asset ( stock, index, currency or commodity) touchs and area or specific value.

Its very important to knowledge that Binary Options deals are done “AT THE MONEY”, this mean that they are bought at the current price of the asset (stock, Index, currency or commodity) and the trader just decide for the following:

- Investment amount (from $25 up to $3000 USD per Binary Option) - The Trend direction the market will follow. Choice a “call” for a uptrend or “put” for a downtrend. - If the trend is accomplished will profit 67% to 75%, if not will take a loss (85% to 100% of the investment). - If you miss the trend you will get a 15% refund (or less).

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3. USING 3. USING BINARY OPTIONS BINARY OPTIONS Binary Options are either CALL or PUT and they are use for:

TO PROFIT IN UP TRENDS BY USING A “CALL” (call to buy).TO PROFIT IN DOWN TRENDS BY USING A “PUT”(put to sell).

It’s very important that you have an accurate opinion about market trend that is going to be follow, support with tools as fundamental and technical analysis and must know how daily economic news affects markets and volatility. For you to be successful it is necessary that on investments, of similar amounts of money, you should have a minimum of 6 to 7 wining trades out of 10 .

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HOW TO TRADE

3.1 HOW DOES 3.1 HOW DOES BINARY OPTIONS BINARY OPTIONS WORKS? WORKS? Binary Options, target Investors (hedger or speculator) that are willing to take a directional bid on the trend of an Underlying Asset (stock, index, currency or commodity). Allowing profits (67% to 75%) from the investment with the correct trend without paying significant premium.

Example : Binary Option working

A) You can choice a Stock, Stock Index, Currency or Commodity. Suppose you choice the Dow Jones Index at 10,000 points level.

B) Now you define the Dow Jones Trend, in the term you will invest your money (You can pick up between 1 hour, 1 day, 1 week or an agree term).

C) If the decision goes to trade for 1 Hour and decide that the Dow will end above the current price at 10,000 level then buy a BINARY CALL OPTION.

D) One hour later the Dow Jones trades above the 10,000 level and you profit70% from your investment, it does not matter if the Dow trades above just for 1 point at 10,001 level or 200 points at 10,200 level , you will get your payoff.

Note : Investments amounts runs from $25 USD to $3000 USD per unit and investment time goes from 1 hour , 1 day , 1 week for matching your trend goals, in case of weekly binary Options the payments goes from 150% to 380% .

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Example: MEXICAN STOCK INDEX (“IPC”)After doing a fundamental and technical analysis about IPC (Mexico Index), I concludethat the IPC will go above its current level now at 32,088 points in the next trading hourThats why I decide to buy a “Binary Call” at 9:00 am (expiry time is at 10:00 am).

Note : Investment in this case is $100 Dollars for the Binary Call Option and the return its 70%, total payoff will be $170.00 Dollars ( if you invest $2000 Dollars, return will be $3400 Dollars).

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3.2 HOW DOES 3.2 HOW DOES BINARY OPTIONS BINARY OPTIONS WORKS? WORKS?

HOW TO TRADE

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If you Think price will expire above the current level.

4. 4. BINARY OPTIONS BINARY OPTIONS BENEFITSBENEFITS• Buying Vanilla Call and Put Options (the traditional way) in most of the cases will expire worthless (80% of times). This because of Time Value Cost, Time Factors, Premium paid in Advance and Over Cost; and not because of the real movement of the underlying asset in which the investment is done.

•Because of the previous exposed, Binary Options being short term and referral to the current value (the one showed in a real time quotes screen) of an asset that is being buy because of a define trend, allows investors to profit without paying any Over Cost. This also allows investors (traders) to get substantial and immediately profits even tough small movements.

•With regard trading “Naked Futures” or Forex, trading Binary Options its like buying Futures with a “Stop loss” (or buying a Currency in Forex Market with a “Stop loss”), with the main difference that in Binary Options , its cost ( investment amount) limits the loss, but will not take you out of the market when the trend is against your trade (closing your position either because being hit on the stop or get a margin call). Several times in Futures the “Stop loss” is hit, you are taken out of the market and later, just few minutes later your main investment decision gets to your initial goal. But you won´t benefit, you are all ready out of the market. Binary Option Advantage is that movements against your trend wont take you out of the market, keeping you alive (open position) for achieving your goal and profit.

•Also use as Directional Hedge using “one touch options” for risk management purpose against any kind of investment portfolio (stocks or commodity) .

5. HOW TO PROFIT IN 5. HOW TO PROFIT IN BINARY OPTIONSBINARY OPTIONS In Binary Options, the return its agree at the precise moment you trade and it does not depend in the magnitude of the underlying asset price movement . So it does not matter if the Binary Option is “In the Money” (inside de reality ) by 1 or 200 points (ticks or pibs), the final return, regardless the price movement will be the same.Take a look and see that that the maximum return in the below cases (IPC, EUR/USD, Dow Jones, Crude Oil) its agree at 70% , which represents the final payment in this Binary Options” that will expire in 50 minutes an inside the range of the trend previously predicted. There is no commission payment for trading Binary Options (Commission is Cero dollars).

TO BE SUCCESSFUL IN BINARY OPTIONS YOU MUST WIN 60% to 70% OF YOUR TRADES . TO BE SUCCESSFUL IN BINARY OPTIONS YOU MUST WIN 60% to 70% OF YOUR TRADES .

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5.1 HOW TO PROFIT IN 5.1 HOW TO PROFIT IN BINARY OPTIONS BINARY OPTIONS In Binary Options, Profit is generated just at expiry time.

In this CALL trade at 14:00 hours, the Euro reach at its expiring time a 1.2077 level , 5 ticks (points) above the entry price ( Exercise Price) . A profit is earned in the amount of $1,400 USD, and the ending balance for the account is $5.275 USD.

Its very important to point out that the Euro could had expired at 1.2078 , just 1 point above and because the goal of being above was accomplished the profit will had being also $1,400 USD.

ONE-TOUCH: They also exist one weekly binary option trades (from Monday to Friday = 5 days). You must analysis the financial asset of your choice buying it with the perspective that the price will go up (Call) or go down (Put). As it is a more extended term, the payoff generally will go from 150% to 380%. If the quoting price of the asset of your choice touch or gets trough the exercise price (floor in a “put” , ceiling in a “call”) you will get your profit and the binary option will expire at that moment. This mean that you have 5 days for your prediction to be accomplish up to expiration time where it will became worthless.

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5.2 5.2 BINARY WEEKLY OPTIONS BINARY WEEKLY OPTIONS PAYOFFSPAYOFFS

6. CALL OPTIONS VS CALL BINARY OPTIONS GRAPH

Where: EP = Exercise Price.P = Current Value Asset Price.Premium CALL Cost = Intrinsic Value + Time Value

BINARY CALL COST = Investment Amount

0

Profit

Cost

BUY CALL (VANILLA)(Price Goes Up)

0

Profit

Cost

BUY BINARY OPTION CALL(Price Goes Down)

EP12.50

Premium

EP12.50

P13.00

P13.00

Call Premium = (P - EP) + Time ValueProfit = Unlimited

Binary CALL Premium = Investment AmountProfit = 70 % - 75% agree over Investment.

Investment

Price Price

$ $

CONTACT US TO HELP YOU OPEN YOUR CONTACT US TO HELP YOU OPEN YOUR BINARY TRADING ACCOUNT BEGINING BINARY TRADING ACCOUNT BEGINING

WITH $500 USD AND ADVISE YOU TO WIN. WITH $500 USD AND ADVISE YOU TO WIN.

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Definition: In Finance a Binary Option is a type of Exotic Option where the return can be either a fix return over the invested amount (profit) in a underlying asset (Stock, Index, Currency or Commodity) or nothing as a total payment. In Vanilla options cost is named premium in Binary Option is named Investment and it should be paid in advance. This Binary Options are use as a Directional Investment (regarding knowing the Trends in advance) in the Markets, either going UP ( Binary Call Options) or going down (Binary Put Options).

6.1 BINARY OPTIONS DEFINTION 6.1 BINARY OPTIONS DEFINTION

Cross RateBinary Call Option

$

Profitfrom 67 % to 75% from total

amount invested

0

Investment ( premium)

Cost = Investment

$10.20 $10.80 $11.20OFOF

Risk = 85% or 100% from the Amount Invested

TO BE SUCCESSFUL TO BE SUCCESSFUL IN BINARY OPTIONS IN BINARY OPTIONS YOU MUST WIN 60% YOU MUST WIN 60% TO 70% OF YOUR TO 70% OF YOUR

TRADES . TRADES .

7. 7. BINARY OPTIONS BINARY OPTIONS ASSET LIST READY TO TRADE ASSET LIST READY TO TRADE

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