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An Introduction To Digital Options

Jul 4 '16 | By joyspriscilla | Views: 116 | Comments: 0
Push Money App Review Digital options, also known as binary options, are options whose returns can only be two (2) possible outcomes, 'In The Money' or 'Out Of The Money'. In addition, the payout of digital binary options are fixed beforehand regardless of whether the underlying asset price is one (1) pip or one hundred (100) pips above (for call options) or below (for put options) the strike price. In other words, whether the fact that you are in the money by $1 or $5, the payout that you will receive is the same. Off late, they are becoming more and more popular among retail investors due to the simplicity in trading them.

There are several types of digital options that an investor can trade in. They are: Cash or Nothing- With this type of option, the investor will receive a fixed amount of return when the option expires in the money. Asset or Nothing- This type of options pays out the value of the underlying asset when the option expires in the money.

Gap Options- This type of options have two (2) strike prices. One strike price will determine whether the option is expiring in the money or out of the money while the other strike price will determine the quantum of the payout. 
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