Getting started in options trading in the United States requires depositing significant upfront capital into an option broker’s account. Before entrusting your money to a brokerage, protect yourself by making sure the broker is fully regulated under U.S. law.
In the United States, the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) under it regulate the market of all option contracts which have a stock or index as an underlying security. The Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) under it regulate the market of all options contracts which have forex, commodities, or futures as the underlying security. (See related How does FINRA differ from the SEC?)
All option traders operating in the United States should be registered and regulated by at least one of the above authorities, depending upon the type of option products they offer. These organizations protect customers and their rights and and insure customer assets should the broker go bankrupt. Below is a list of top U.S.-regulated options brokers. Please note that this list is not presented in any particular order and is not exhaustive. There are many more regulated options brokers.
Follow us: Investopedia on Facebook
Binary options are based on a simple yes or no proposition: Will an underlying asset be above a certain price at a certain time? Traders place trades based on whether they believe the answer is yes or no, making it one of the simplest financial assets to trade. This simplicity has resulted in broad appeal amongst traders and newcomers to the financial markets. As simple as it may seem, traders should fully understand how binary options work, what markets and time frames they can trade with binary options, advantages and disadvantages of these products, and which companies are legally authorized to provide binary options to U.S. residents.
Binary options traded outside the U.S. are typically structured differently than binaries available on U.S. exchanges. When considering speculating or hedging, binary options are an alternative, but only if the trader fully understands the two potential outcomes of these exotic options. (For related reading, see What You Need To Know About Binary Options Outside The U.S.)
U.S. Binary Options Explained
Binary options provide a way to trade markets with capped risk and capped profit potential, based on a 'yes' or 'no' proposition.
For example: Will the price of gold be above $1,250 at 1:30 p.m. today?
If you believe it will be, you buy the binary option. If think gold will be below $1,250 at 1:30 p.m., then you sell this binary option.
The price of a binary option is always between $0 and $100, and just like other financial markets, there is a bid and ask price.
The above binary may be trading at $42.50 (bid) and $44.50 (offer) at 1 p.m. If you buy the binary option right then you will pay $44.50, if you decide to sell right then you'll sell at $42.50.
Let's assume you decide to buy at $44.50. If at 1:30 p.m. the the price of gold is above $1,250, your option expires and it becomes worth $100. You make a profit of $100 - $44.50 = $55.50 (less fees). This is called being in the money.
Follow us: Investopedia on Facebook
Mr Benjamin went above and beyond their requirements to assist me with my loan which I used to expand my pharmacy business,They were friendly, professional, and absolute gems to work with.I will recommend anyone looking for loan to contact. 247officedept@gmail.com.WhatsApp ... + 19893943740.
BalasHapus