Basically, options mean you reserve the right to buy or sell stocks at initial price (when the contract is signed) in certain duration (usually 3-6 months).
- Call Options: If you predict that the selected stock’s price will increase within the duration. You can get profit by either buying stock at the initial value and then sell it with current value. The difference between current and initial value will be your profit. Another way to get profit if you don’t have enough money is by selling your right to another party. Both way, you’ll get profit
- Put Options: In the second option, you’ll make profit when your guess of certain stock’s price will decline is right. If the stock’s price decreases, you deserve the right to buy stock at current value and sell it at the initial value (when the contract is signed). However, if the stock’s price increases, to avoid you from getting loss, you can do nothing.
Next, we’re going to discuss a bit about binary options. Basically, it’s similar to options that allow us to make money when we make correct prediction and minimize the risk of losing too much money when our guess isn’t correct. It’s much better than investing in stocks, especially for beginners who don’t really understand the tips and tricks.
The main difference between options and binary options are the contract duration of binary options is usually shorter. It ends within 1-3 hours. People are allowed to make decision before the contract ends. Therefore, binary options are suitable for people who want to get money fast. Of course, they still need to fully consider their decision because when they make mistake, they’ll lose some of their money promptly.
Which one is better?
Now, if you ask me which one is better, it’s quite difficult to answer. It depends on your preference. For sure, the margin price of the options is usually bigger and you have more time to think. However, if you don’t like waiting, binary options should be your choice.