The warning towards this venture is “do not invest in something that you do not entirely understand.” If you are unable to explain the investment opportunity in a few words and in an understandable way, you may need to reconsider your position and the potential risk to your investment. From this beginning, I will say that before investing in binary options, you should take the precautions that must include checking to see if the binary options trading platform has registered the offer and sale of the product with the necessary regulatory body. “In finance, a binary option is a type of option where the payoff is either some fixed amount of some asset or nothing at all. The two main types of binary options are the cash-or-nothing binary option and the asset-or-nothing binary option. The cash-or-nothing binary option pays some fixed amount of cash if the option expire in-the-money while the asset-or-nothing pays the value of the underlying security. Thus, the options are binary in nature because there are only two possible outcomes.Binary Options in Global Financial Markets fall under the umbrella of exotic options but within financial markets they are often referred to as digital options. While digital options are very simple to understand and easily traded, the calculations behind the pricing is sophisticated and so they are considered exotic options.
