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Oil Binary Options

Oil is the world’s most heavily traded commodity. Thanks to the predominance that this has throughout the world as a source of fuel, people in every nation use massive amounts of oil on a daily basis. Trading oil can be quite confusing though. You need to have the knowledge to read price charts and fundamental indicators, but you also need a firm grasp upon how futures work and just how long it will be before the price hits an acceptable level for you to make a worthwhile profit. Also, the price of entry when it comes to trading commodity futures can be pretty steep, and this eliminates many traders from testing the waters.

Oil binary options can be a great way to circumvent these problems. This type of trading is much cheaper to begin with, for starters. A commodity futures trade can cost tens of thousands of dollars, in some instances, while a typical binary option can be purchased for $10 with most brokers. Your purchasing power is much stronger with binary options, too, since you can make bigger gains while risking much smaller amounts. You won’t be right all the time with your predictions, but a $100 options trade, for example, will only lose you $100 if you are incorrect. A futures contract could lose thousands of dollars if you’re wrong and cannot unload your position quickly enough. In other words, the stakes with binary options are much lower, and this makes them much more attractive to smaller traders and those just starting out in their trading careers.

Binary options are simple to understand, especially in their most basic form: the call/put. Basically, you are given a starting point and you are trying to decide whether the price will be higher or lower by the time the expiry is reached. So if oil is currently at $96.00 and you think that 15 minutes from now, the price will be at $96.05, a call option will be your choice. A standard binary option over this amount of time will return 70 to 85 percent to your trading account—even though the price increase was only $0.05. So if you are buying a call option for $100, you will have a profit of anywhere from $70 to $85, depending upon the broker and the current market conditions. If you were to speculate the same amount in the traditional oil marketplace (assuming a commodities broker would allow this), your return would only be a few cents—this gives binary options a big advantage in this instance.

Oil TradingAnother big issue is the timeframe over which oil is traded. A futures contract might take six months or longer to mature. If you are hoping to make a quick profit, you can sell off your contract if there is a demand for contacts that have not yet reached maturation, but for the most part, your money will be tied up for quite a while. Binary options avoid this. There are even some options that can last as little as 60 seconds. The return on these types of trades are fairly high, too. It’s not uncommon for a 60 second option to return as much as 72 percent of your initial investment amount. This is a rate that a six month futures contract will only meet in very rare instances. So for a fraction of the price, over a tiny fraction of the total time, you can make even more money with an option than you could with a futures contract.

Binary options aren’t always the best way to trade, but they do have some huge benefits, especially when it comes to trading commodities like oil. They are easier for the average person to trade, and this will likely cause the binary options marketplace to keep growing.

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