Difference Between PUT Binary Option & CALL Binary Option

BinaryOptionsNow | Published on August 15, 2011 at 2:48 pm

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BinaryOptionsNow – For the past few years, the world of online trading has been growing exponentially, but out of all the different forms of online trading, there’s one type of financial trading that has surpassed all others due to its simplicity and profitability – it’s called Binary Options trading. If you have not already tried binary options trading, click here to get a free demo account with OptionBit.

The great thing about Binary Options trading is that anyone can learn how to do it in just a few days of trading. In this article we will explain the basics of binary options trading by answering the question: What is the difference between a PUT and a CALL in Binary Options trading?

PUT vs. CALL Binary option

1. PUT Binary Option

A Binary Option is considered a “PUT” option if the option becomes profitable when the underlying asset loses value relative to its value at the moment of its purchase.

For example, consider a Forex Binary Option placed on the Euro/US dollar exchange rate: If you predict that the rate of one euro in US dollars will decrease in the near future, you would want to buy a PUT forex binary option on EUR/USD since you are speculating that the EUR/USD rate will go down since one Euro will be worth less in US dollars.

Thus, a PUT Binary option is useful when you anticipate the decrease in value of an underlying asset.

(Note: If the option expires exactly at the same price than the one at the time of the investment, the original sum will be fully returned to the investor.)

2. CALL Binary Option

A Binary Option is called a “CALL” option if it becomes profitable when the underlying asset increases in value relative to its value at the moment of its purchase.

For example, consider a commodity Binary Option placed on Gold: If you speculate that gold will appreciate in value due to prevailing economic conditions, you would want to invest in a CALL on a gold binary option.

Thus, a CALL Binary option is useful when you anticipate the increase in value of an underlying asset.

(Note: If the option expires exactly at the same price as the one at the time of investment, the original sum will be fully returned to the investor.)

Now that you know all the difference between a CALL binary option and a PUT Binary option, you can sign up for a Free Demo Account and get $500 in practice money free when you trade binary options with OptionBit.

 

Click HERE to know when to Buy a PUT Option

Click HERE to know when to Buy a CALL Option

 

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