Binary Option Strategy
Call or put option – part of Binary Option Strategy
One of the many binary options is the PUT option. A put option can be defined as is a contract between two people to exchange an underlying an asset, at a specified price, by a prefixed end date, its expiry and its maturity. A put becomes more valuable as the price of the stock depreciates relative to the strike price.
Puts may also be joined along with different derivatives or binary options as they would become a part of more complicated investment strategies or a more complex binary option strategy. This may be further useful for hedging, in particular. The put options are mostly widely traded on equities, interest rates and commodities.
One can exercise the option's right whether to sell it which may differ depending on different option styles which may be either a European put option. This allows the holder to take the put option for a short period of time, right before expiration, or it may be an American put option. This allows the holder to take the put action anytime before expiration.
The call option on the other hand is another binary option which is widely used to formulate the binary option strategy. The call option’s the deal between a couple of parties, which is financial in nature, the purchaser as well as the seller. The call option’s purchaser has the authority and not the compulsion to purchase a decided amount of a definite product / monetary tool from the option’s seller at a definite instant for a definite price.
The seller’s duty-bound to have the product or monetary tool sold if the purchaser decides so. The purchaser reimburses a premium for doing so. As an important binary option used by the trader for its binary option strategy, the purchaser of the call option buys it hoping that the cost of the asset would rise in future. Call options happen to be the most lucrative binary options for the purchaser. The risk is restricted to the premium for the call buyer.