# Types of binary options

Trading in Binary options is like a betting process, and to understand the types of binary options you need to understand how this process works and certain relative terms: Call/put options: All types of binary options are based on call/put betting option. An investor in binary options needs to simply predict the path (rise or fall) the price value of an underlying asset may take within a stipulated period of time called the ‘expiry date’. If you predict that the price of the asset may increase within the given time frame then you go for the ‘call option’.

If you predict that the cost of the asset may decrease within the given time then you go for ‘put option’. Based on your predictions there can be only two possible outcomes for any binary options contract: ‘in-the-money’ meaning you stand to gain profit because your betting was right or ‘out-of-the-money’ where you do not gain any profit as your prediction was incorrect. Based on this simple system of betting various types of binary options are available for trading.

a) Cash/nothing: the investor needs to purchase a contract on the performance of the asset’s stock within the expiry date. He stands to gain a fixed amount (say 15% of the stock) or nothing based on the accuracy of his predictions within the expiry date.

b) Asset/nothing: the investor predicts directly on the price of the underlying asset and stands to gain a payout equal to the price of the underlying asset only on success.

c) One touch: trader is required to set a target value called the ‘strike price’ or ‘trigger ‘which he assumes the asset will reach within the expiry date.  The trade is a success if the asset reaches the trigger and the trader gains a predetermined fixed amount as per the contract.

d) No touch: the opposite of one touch where in the betting is made for the strike price that the asset will never reach within the expiry date.

e) Double-one-touch: same as one touch but involves two strike values that the asset may be expected to reach with in expiry of the trade.

f) Double-no-touch: exact opposite of the former, where two triggers points are predicted that the asset value will fail to reach before trade expires.