Types of Binary Options - Binary Options Australia

Binary options come in various forms, each offering different ways for traders to speculate on the price movements of underlying assets. Below is a detailed look at some of the most common types of binary options, but the list is not exhaustive and some brokers offer binary options types that are not covered by this list.

Binary options come in various forms, each catering to different trading strategies, market conditions, and risk appetites. Each type offers unique opportunities and challenges, from the straightforward High/Low options to the more complex Ladder or Pair options.

Since each broker creates its own assortment of binary options, it is always important to look at the rules and conditions applicable to your specific broker instead of relying too much on general guides such as this one. For instance, a broker can offer a boundary binary option but with certain special differences in how it works compared to the most common type of boundary binary option. Always check the fine print before you put any money at risk.

Also, remember that regardless of which type of binary option you select and which broker you use, binary options trading is highly speculative and carries significant risk. This has led to increased regulation and, in some cases, outright bans in some. It is important to do your homework and fully understand the risks involved before you choose to engage in binary options trading.

Binary options trading is legal in Australia, but it is heavily restricted and brokers are not allowed to offer and sell any type of binary option to retail traders (non-professional traders) in Australia. If you are a retail trader and want to use a broker that complies with Australian regulations, you can, for instance, use Contracts for Difference (CFDs) instead. Just like the binary option, the CFD is a derivative that can be used for speculating on the movements of a wide range of underlying assets and financial products, e.g. stocks, bonds, forex pairs, ETF:s, and commodities.

1. High/Low Binary Options

Sponsored Brokers With Binary Options Trading

Australia accepted.

Australia accepted.

Australia accepted.

Australia accepted.

High/Low options, also known as Call/Put options, is the most basic and widely traded form of binary options. In this type, the trader predicts whether the price of an underlying asset—such as a stock, commodity, currency pair, or index—will be higher or lower than the current price at the option’s expiration. If the trader believes the price will rise, they place a “Call” option; if they believe the price will fall, they place a “Put” option.

This type is straightforward and offers a fixed return if the prediction is correct. However, if the prediction is wrong, the trader loses the entire invested amount. Due to its simplicity, High/Low options are popular among beginners.

2. One Touch Binary Options

The One Touch option is a type of binary option where the trader bets on whether the price of an asset will reach a predetermined target price at least once before the option expires. If the asset touches the target price, the option pays out a fixed return, regardless of whether the price subsequently falls below or rises above that level by the expiration time.

One Touch options are appealing to traders who anticipate significant market movements but are unsure of the final closing price.

3. No Touch Binary Options

No Touch options are the inverse of One Touch options. In this type, the trader bets that the price of an asset will not touch a predetermined price level before the expiration of the option. If the asset’s price remains above (or below, depending on the option) the specified level throughout the option’s duration, the trader receives a payout.

No Touch options are ideal in markets where the trader expects stability or limited price movement and can be useful in hedging strategies where the trader is seeking to limit downside risk.

Some traders who utilize technical analysis use the no touch binary option when they suspect a price to be moving up and down in an overall upwards trend, but never fall below a certain price point during that upwards trend period. The no touch binary option can also be useful when you have identified a downward trend in the price of an asset and is confident the price will never go above a certain price point during the lifetime of the binary option.

4. Range (Boundary) Binary Options

Range options, also known as Boundary options, allow traders to predict whether the price of an asset will remain within a specific price range or boundary, or whether it will break out of that range by the time the option expires. The range is defined by an upper and lower price limit, and the trader can choose to bet on the price staying within the range (In) or moving outside it (Out).

Range options are particularly useful in markets where the trader expects limited price movement. These options provide an opportunity to profit in sideways or stable markets where traditional directional options might not be as effective.

Price stability is often a challenge to traders who are used to speculating on price movements, but with range binary options it is possible to make a profit even in stagnant market conditions.

5. Ladder Binary Options

Ladder options are a more complex type of binary option that provides multiple price levels (or “rungs”) with different payouts for each level. The trader predicts whether the asset’s price will reach or exceed each of these levels by the option’s expiration time. Each rung has its own payout ratio, with higher payouts typically associated with higher risk levels, such as more distant price targets.

Ladder options offer a structured approach to trading, allowing traders to spread their risk across multiple levels. This type of option is ideal for traders who have a strong conviction about the market direction and want to capitalize on both moderate and significant price movements.

Binary options are often critized for their binary (all-or-nothing) nature. The ladder option, however, is not truly binary, since you can get paid at certain levels and not get paid at others.

6. Pair Binary Options

Pair options involve comparing the performance of two assets, usually within the same sector, and betting on which one will outperform the other by the option’s expiration. For example, a trader might choose between two tech stocks, such as Apple and Google, predicting which will have a higher return over a set period.

Pair options are particularly popular among traders with a deep understanding of the relationship between two assets and the factors that could affect their relative performance. These options offer a different kind of speculation that doesn’t rely solely on the absolute price movement of a single asset but rather on the comparative performance between two. They are therefore more complex.

Traders with previous experience from forex speculation often find it fairly easy to grasp the dynamics of the pair binary option, since they are already used to dealing with a type of speculation where two different assets are compared to each other.

What are Turbo Binary Options?

This is not a special type of binary option; it is just a term used to denote a binary option with a very short lifespan. Different brokers have different ideas about exactly how shortlived a binary option must be to be called a turbo, but a common benchmark is 60 seconds or less.

Many different types of binary options can be offered as turbo binary options. Traders use these options to capitalize on small, quick price movements in highly volatile markets. The quick turnover allows traders to execute a large number of trades in a short period if they want to, potentially leading to substantial profits—or substatial losses—in a brief time frame.

Due to their fast pace, 60 Seconds options require quick decision-making and are best suited for experienced traders who can analyze market conditions rapidly. It is also worth noting that the risk of getting into the habit of using a finacial product in a manner more similar to gambling than trading increases when the timespan between purchase and payout (or loss) is very short.

What are Classic Binary Options?

The term classic binary options is sometimes used to denot High/Low binary options, since they are the original form of binary options. The category classic binary options would thus include High Put Options, High Call Options, Low Put Options, and Low Call Options.