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Abstract:A binary option is an exotic financial instrument where the result is either a fixed amount (win) or nothing at all (loss).
A binary option is an exotic financial instrument where the result is either a fixed amount (win) or nothing at all (loss).
That's what makes it exotic in that it is high risk, high reward trading. For example; you could trade with $10, you will either get back your $10 and a set percentage of your investment if your prediction is correct; or you loose the entire $10 investment.
Binary options work on a simple yes or no basis. You choose whether a price of a certain asset will be above or below the price point where you enter a trade. You get a predetermined payout if you are right, and you loose your trade amount if you are wrong.
In online binary options trading, contracts are sold by a broker to a customer or trader using the over-the-counter method. Brokers sell binary options at a fixed price and offer a fixed percentage return is a trader's prediction is correct.
To close off, binary options trading is not illegal in South Africa, but it is a pain to get your profits withdrawn from the brokers that offer them.
P.S. although binary options are regarded as a instrument, in some countries binary options trading is regulated under gambling licenses. As for South Africa, only a handful of brokers that offer binary options are regulated by the FSCA.
Disclaimer:
The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.
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