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A Guide to Trading Binary Options in the U. Binary options are based on a simple yes or no proposition: will an underlying asset be above a certain price at a certain time? Binary options traded outside the U. 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.
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. If you believe it will be, you buy the binary option. 100, and just like other financial markets, there is a bid and ask price. This is called being in the money. This called out of the money.