Binary Options Trading GuideThe Complete Binary Options Trading Guide
Binary Options were introduced in 2008. What characterize a binary option is that it has a fixed payoff if the option is-in-the money when expires, or nothing if it is out-of-the-money when it expires. Binary options are also referred to as digital options or as ‘all-or-nothing options’ or Fixed Return Options (FROs) in the USAmerican Stock Exchange).
Payout rates are not fair for traders
In general, the payout rates of binary options are in accordance with the popularity of their underlying instrument. For example, EUR/USD offers better payout rates than other less popular currency pairs. The reason is that popular assets tend to attract more competition among brokers and thus returns are better for traders.
Binary options offer far less return than they should. The fair return should be around 98%, given that the risk is 100%. Nevertheless, binary options offer returns of 75-90% and that means they are not fair for traders.
Important Note: Binary Options are extremely risky
This is a guide for educational purposes only, and you are strongly advised NOT to trade binary options. Binary options are extremely risky and can be categorized as a pure gambling asset class. Nevertheless, education should have no boundaries and that is why this guide is included.
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Trading the Bitcoin Calendar Spread

The calendar spread is a useful gauge of how bullish or bearish traders are in a forward starting-time period. In early February, Bitcoin lost close to 70% of its value measured against its December 2017 all-time high. The spread reached a low of 0.42% annualized during the same period.

The source for this analysis is BitMEX► BitMEX Crypto Exchange

Chart: March (XBTH18) and June (XBTM18) Bitcoin/USD contract spread

Bitcoin Calendar Spread

Source: BitMEX

The above chart shows the Bitcoin price and the annualized premium of the March (XBTH18) and June (XBTM18) Bitcoin/USD contract spread.

The calendar spread is calculated by the following function:

Annualised Premium = [(XBTM18 Price - XBTH18 Price) / Bitcoin Spot] / 0.2493

0.2493 represents the annualized time value between the March and June expiry dates.

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