There are a lot of options for a trader to choose from when trading in binary options. One of these options is the so-called one touch binary option. Not all brokers offer this options, but some of the big ones like ioption do. When you trade using the one touch binary options, there are still two choices for you to choose from and that is whether the asset will move up or down in the market. However, the difference lies on the fact that when you trade under this option, you get to do the following:
- Choose a cap or barrier
- Set the expiration time
- Set the amount of the pay out
Choosing a cap or barrier means stating an exact how much an asset will settle in the market. For example, if you are trading in currencies, then you can set the barrier of the Euro at 1.2995 or when you are trading indices you can set the barrier of the S&P 500 to close at 1553.28. When you set the expiration you can choose to go daily or weekly. In our currency example you can choose for the Euro to close at 1.2995 at the end of the day or close at that rate at the end of the week. The same goes with index trading. You can choose for S&P 500 to close at 1553.28 at the end of the day or at the end of the week.
When you trade in binary options under the one touch option, you are actually trading that the following happens to the asset you are trading on:
- That it will go higher than the barrier set
- That it will go lower than the barrier set
If at the end of the expiration period, whether it is at the end of the day or at the end of the week, the first situation above happens, and you bought this option then you earn the predetermined payout which is usually around 250 to 400% return on your initial investment.