Market News

Binary Options vs Digital Options

Jul 20 2017
By Jonathan Smith

The binary options industry continues moving forward. One of the rather new products which is available are the so called “digital options”. Though they may appear similar in nature to the classic binary options, there are several differences worth pointing out.

The defining one is the addition of strike prices.

A typical binary option allows you to trade, in relation to the current market price. For instance, if EUR/USD is trading at 1.1500, you can only purchase a call (or put), with a strike price of 1.1500. Thus means your option will be in the money, if the exchange rate is above (or below) 1.1500, at the time of expiration.

With digital options you can buy calls and puts at price levels different than the one the price is currently being traded at. These are called the strike prices. It goes without saying, but this provides greater flexibility to the trader.

Here is a side by side comparison of the two types of products, as provided by IQ Option:

As you can clearly see, with the digital option, we are looking at a strike price, which is fairly away from the current price. The binary option, on the other hand only allows trading at the current price. You may also note the vastly different payouts, which are quite normal, considering the strike price we were looking at.

Strategic possibilities

On one hand you can place a much more precise prediction, which will increase your profit percentage (or payout). The maximum payout with digital options at IQ Option is 900%. The more exciting aspect is the fact you can create rather complex strategies with this approach.

For instance if price is trading in a narrow range, and you expect it to be broken, you can place a call above and a put below it. Although similar options are available, the key factor is that with digital options, you can determine the levels more accurately. If you think the top of the range should be further away from the price, than the bottom, you can easily set it up in such a way.

Example of a wide range. Although this range is fairly wide, the payout, if it is broken will cover the cost of both options

Alternatively, if you think the range will not be broken, you can place a put above its high point and a call below its bottom. Again, maximum flexibility is provided by the fact you can easily set-up wide ranges, tight ranges and even asimetric ones (the call and the put being set at a different distance from the current price).

Of course the list of possibilities is not limited to these, as you have probably already thought of a few different strategies.

TAGS: binary digital options binary options digital options strike price

Broker	Advantages
	FXTM a regulated forex broker (regulated by CySEC, FCA and FSC), offering ECN trading on MT4 an MT5 platforms. Traders can start trading with as little as $10 and take advantage of tight fixed and variable spreads, flexible leverage and swap-free accounts.
	Forex.com is a large broker listed on the New York Stock Exchange. We like it not only because it’s regulated in the U.S., Japan, Australia, Canada and Hong Kong but also because it offers very good spreads and superior execution.

	XM is broker with great bonuses and promotions. Currently we are loving its $30 no deposit bonus and deposit bonus up to $5000. Add to this the fact that it’s EU-regulated and there’s nothing more you can ask for.
	FXCM is one of the biggest forex brokers in the world, licensed and regulated on four continents. FXCM wins our admirations with its over 200,000 active live accounts and daily trading volumes of over $10 billion.
	FxPro is a broker we are particularly keen on: it’s regulated in the UK, offers Metatrader 4 (MT4) and cTrader – where the spreads start at 0 pips, Level II Pricing and Full Market Depth. And the best part? With FxPro you get negative balance protection.
	FBS is a broker with cool marketing and promotions. It runs an loyalty program, offers a $100 no-deposit bonus for all new clients outside EU willing to try out its services, and an FBS MasterCard is also available for faster deposits and withdrawals.
	FxChoice is a IFSC regulated forex broker, serving clients from all over the world. It offers premium trading conditions, including high leverage, low spreads and no hedging, scalping and FIFO restrictions.
	HotForex is a EU Regulated broker, offering wide variety of trading accounts, including Auto, Social and Zero spread accounts. The minimum intial deposit for a Micro account is only $50 and is combined with 1000:1 leverage - one of the highest in the industry.
	Exness is a leading forex broker, offering MT4 and MT5 platforms. Traders can take advantage from a true ECN environment and trade on ultra tight spreads, starting from 0 pips.

Broker	Country	Regulation	Platform	Min Deposit	Review
	Cyprus, UK, Mauritius	CySec, FCA, FSC	MT4, MT5, Web	$10	Review Website
	UK	FCA	MT4, Web, ForexTrader, Tradable	$50	Review Website
	Australia, Cyprus	ASIC, CySEC	MT4, MT5, IRESSTrader	$100	Review Website
	Cyprus, Australia	CySec, ASIC	MT4, MT5	$5	Review Website
	UK, Australia, South Africa	FCA, ASIC, FSCA	MT4, Trading Station, NinjaTrader	$50	Review Website
	UK, Cyprus, UAE, South Africa	FCA, CySEC, DFSA, FSB	MT4, MT5, FxPro Markets, cTrader	$100	Review Website
	Cyprus	CySEC	MT4, MT5, Web	$1	Review Website
	Belize	IFSC	MT4, MT5	$100	Review Website
	Cyprus, UK, South Africa, UAE	CySec, FCA, FSCA, DFSA	MT4, MT5, Web	$5	Review Website
	Cyprus, UK	CySEC, FCA	MT4, MT5	$1	Review Website
	UK	FCA	MT5	$5	Review Website
	UK	FCA	MT4, Web, MT4 for Mac	$100	Review Website
	Australia, UK	ASIC, FCA	MT4, MT5, cTrader	$200	Review Website

More Forex Market News

CFTC warns about 20 new forex and binary options scams

Dec 06 2019 17:46:44

The US Commodity Futures Trading Commission (CFTC) updated its warnings list with twenty new forex and binary options scam websites, bringing the total blacklisted websites to nearly 150. Read more

Thai authorities seize over 15 million baht from Forex-3D scammers

Dec 06 2019 10:38:02

Officials from the Thai Department of Special Investigation (DSI) seized over 15 million baht from the owner of Forex- 3D Ponzi scheme and his associates, the Bangkok Post reported on Thursday. Read more

EU finance ministers agreed to block Libra

Dec 05 2019 13:46:59

EU finance ministers have agreed that private digital currencies like Libra – the crypto coin Facebook plans to launch in 2020, should not be allowed in the European Union until all possible risks are identified and properly addressed, Reuters reports. Read more

CFTC looks for a binary options scammer who defrauded investors with $3,8 mln

Dec 03 2019 17:20:38

The United States Commodity Futures Trading Commission (CFTC) apparently can not locate Peter Szatmari, who defrauded nearly 4 million USD from binary options investors. Read more

Bulgarian court allows the extradition of Gal Barak to Austria

Dec 02 2019 17:51:14

After a successful operation of the police in Austria, Germany, the Czech Republic and Bulgaria has lead in February to the arrests of several financial executives, among which the Izraeli citizen Gal Barak, who is charged of orchestrating an online trading scam, that allegedly has defrauded Europea... Read more

Italy’s CONSOB blacklists EvolutionBrokers and KapitalSwiss

Dec 02 2019 15:30:33

Italy's financial regulator Commissione Nazionale per le Societa e la Borsa (CONSOB) has blacklisted a bunch of unregulated brokers today, including EvolutionBrokers, and KapitalSwiss. CONSOB also ordered internet providers to block access to their websites. Read more

91 arrested in Indonesia over an online investment scam

Nov 29 2019 10:32:00

The Indonesian police has arrested 85 Chinese nationals and 6 Indonesians over an online scam that defrauded victims of over 36 billion Indonesian rupiah (2,56 million USD). Read more

Second person arrested in connection to OneCoin money laundering

Nov 28 2019 17:36:36

David R. Pike, a chief operating officer of Fenero Funds was arrested by the U.S. authorities in connection to laundering some 400 million USD, stolen through the notorious OneCoin Ponzi scheme. Pike appears to have worked with the convicted OneCoin layer Mark S. Read more

UpBit hacked for $50 mln

Nov 27 2019 17:05:16

After a hacker attack South Korean crypto exchange UpBit has lost some 342 000 Ethereum (ETH) coins, equal to well over 49 million USD. The exchange has assured its clients that the loses will be covered by its own assets, but for the time being all withdraws have bees suspended. Read more

Charles Schwab buys TD Ameritrade for $26 bln

Nov 26 2019 18:01:43

Expected to be finalized in late 2020, the merger between two of the leading U.S. brokerage houses will create a mammoth company that will be in the position to challenge major financial rivals. Read more

TOP FOREX BROKERS

BINARY OPTIONS BROKERS

LAST COMMENTED

BROKER LISTS

Broker types

Brokers by platform

Brokers by payment options

Brokers by account types

Brokers by spreads

Signals & Social trading

Brokers by country

Brokers by regulation

Gold, oil, options brokers

Other

CRYPTOCURRENCY EXCHANGES

de | cn | ru