Expiry Times in Binary Options Trading

Binary options are a derivative, traded on any asset or market. For example a stock price (Twitter, AstraZeneca, etc), indices (FTSE, DAX, Nikkei), commodity value (gold, crude oil), or foreign exchange rate (EUR/USD, GBP/USD). Even cryptocurrencies such as Bitcoin or Ethereum can be traded. Expiry Times in Binary Options Trading can start from few seconds until months!

The main difference between more traditional stockbroker trades, and binaries, is the clear identification of risk and reward before the trade is made. An investor knows exactly how much is at risk, and crucially, he also knows the exact value of any potential returns. No calculator, formula, or maths degree is needed to work out profit and loss on a binary option.

This structure of the trades is what has led to the terminology of “all or nothing”, or “cash or nothing” is widely used.

The only decision for a trader is if the value of the underlying asset will rise or fall. The degree of price change is not important. The trader is purely speculating on whether the price will be higher or lower than the current price, at a specific time in the future.

Every binary option is offered with an expiry time. This is the point at which the trade will end. So the price at expiry is the one that will decide whether an option has won or lost (“in the money”, or “out of the money” in binary jargon). These expiry times can vary from just 30 seconds or 1 minute, (known as ‘turbos’), to a full day (‘end of the day’), to even longer in some circumstances – rolling up to a full year.

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Generally, however, a binary option is used for short term trading – usually under 30 minutes (60 seconds are the most popular). Longer-term expiries – and the element of fixed risk – does make them useful tools for hedging or diversifying other holdings.

Payouts change dependant on the asset and the expiry time. Differences can be significant so traders looking to use binary options long term, need to shop around to find the best payout for the asset class (or classes) they intend to trade.

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Binary options suffer from a poor reputation. This is basically a result of dishonesty and irresponsible marketing and cybercrime, more than an issue with the product itself. With tighter regulation and a better understanding by the wider public, these options can – and will – move into the financial mainstream. Which was where they originally developed.

Expiry Times in Binary Options Trading

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