If you purchase the binary option right after that, you will certainly pay $44.50. If you make a decision to sell appropriate then, you’ll cost $42.50. Allow’s assume you decide to buy at $44.50. If at 1:30 p.m. the price of gold is above $1,250, your option expires and it ends up being worth $100.
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The individual that marketed to you has a maximum danger of $55.50 if the option works out at $100–$100 – $44.50 = $55.50. A trader might acquire numerous contracts if preferred. Here’s another instance: NASDAQ US Tech 100 index > > $3,784 (11 a.m.). The existing bid and also deal are $74.00 and also $80.00, specifically.
If you think the index will be below $3,784 at that time, you cost $74.00, or position an offer above that cost and hope a person buys it from you. The Best-Binary-Options-Auto Trade Software-Complete Guide-and-The Best-Binary-Option-Brokers-2020-in-Liechtenstein. You decide to cost $74.00, thinking the index is going to drop below $3,784 (called the strike price) by 11 a.m.
Let’s take the adhering to inquiry as an example: Will the rate of gold be above $1,250 at 1:30 p.m. today? If you think it will certainly be, you acquire the binary option. If you believe gold will certainly be below $1,250 at 1:30 p.m., then you offer this binary option. The price of a binary option is constantly between $0 and $100, and also similar to various other economic markets, there is a bid and ask cost.