What Are Digital Options And How Do They Work?

Digital options, also known as binary options, are popularizing in the investing world. For an investor like yourself to enter the digital options market and profit, you need to understand how the emerging market functions. Traders who don’t invest their time in familiarizing themselves with the market lose more capital than they gain. Many investors do try to learn about binary options, but fail to wrap their heads around what this type of investing entails. To set yourself up for success, continue reading and learn what digital options are and how they work.

“Yes”/”No” Proposition

To begin, you need to understand the basis of  digital options. They are always priced within a $0-$100 range and operate on a “yes” or “no” proposition. When you enter the market, you will place trades according to one of two beliefs. If you believe that the answer to a question is “yes”, buy the binary option. It is one of the simplest ways to trade because of how straightforward the basis is. However, investors still falter when they do not research the market before choosing between “yes” and “no”. Carefully consider every bid and ask price when trading digital options.


In order to trade digital or strangle options, you must obtain specific requirements. Firstly, find an experienced broker with a good reputation. Once you have a broker to work with, you can get a trading account and use a trading platform. After you get a trading platform, you gain the ability to trade multiple financial securities. However, you must stay within the boundaries implemented by the broker you are working with. Although most trading digital options require a hefty chunk of change to invest, binary options do not. To begin trading, you can have as little as $1 to invest. You can enter the market and lose barely anything. This is one very influential feature of binary options and how they work.

Types Of Binary Options

Before getting your feet wet in binary option trading, consider the four different types of  digital options. These four options consist of high/low, touch, range, and 60 seconds. Most traders choose the first option and, as a result, predicted based on underlying assets based on predetermined prices. You take a position during the expiration period. The touch option also demands positions to be made at the time of expiration. However, the asset you are anticipated based on touches its strike price with this option. With the range option, the asset is already in a predetermined range during the time of expiration. The last option you have expires within 60 seconds of your purchase. Get a sense of how you could work with each binary option prior to buying in.

What You Can Trade

Prior to entering the digital option market, you need to know what you can trade as well. Unlike many other investment options, you have a wide variety of trading options. Investors trade currency pairs, stocks, indices, and commodities. This long list of options provide traders with a lot of options. If you have experience in trading stocks, you can stick to what you are good at and continue trading stocks in the digital options market. Traders who prefer trading commodities can do that as well. Furthermore, investors who want to dabble with multiple types of investments can do so within the same online platform. Trading digital options allows all kinds of investors to profit.

Trading Process

Once you fully understand all of the components of digital options separately, you need to learn how they all fit into the trading process. To kick-start your process, you need to choose the assets you wish to trade. After you determine which assets are a good investing option, calculate what you think the price will be at expiration. This calculation is often referred to as the “strike price”. Your final step is to choose an expiration date. This last step directly impacts the end value of your binary option, so consider it at great lengths. If you understand this process and all of its components, you are ready to trade binary options.

The digital options market provides investors with tons of profitable opportunities. To benefit from what is binary options and the market, first understand the “yes”/”no” proposition it is based off of. Then, obtain the requirements you need to get started. Consider the four options types: high/low, touch, range, and 60 seconds. Then, look into the assets you are able to trade. Lastly, put these components together to properly learn the trading process. Now, you know what binary options are and how they work.

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