Binary options and fraud
There are major differences between such options as the traditional ones and the binaries. In case of the latter the payback would be fully related to the result of “yes” or “no” offer. This offer usually means, whether the price of a certain option-basing asset will go up or down. For instance, this type may signify, whether the price of the stock from the particular company will be higher than a certain defined price per one share at concrete time, or if the price of silver will go beyond the set price per 1 ounce on a concrete date.
When the trader purchases the option, he can only decide to operate with these options or not. The reason for it is that they are operated in an automatic manner. In comparison to the rest, binary options trading do not allow the trader to work with the basing asset. At the moment of expiry time, the trader gets either a particular sum or nothing back. The options, which possess the scheme of all-or-nothing paybacks, are in some cases being called accordingly, as well as “the options of fixed return”.
There are separate binary options, which are mentioned on a registered exchange houses or are being operated through defined trade markets that are controlled by the US authorities, namely seC or CFtC, accordingly. However, it is only a part of this market. A big part of such exchange is being carried out via web-supported trading platforms, which are not always corresponding to the United States authority’s terms. There has been a recent dramatic increase in the quantity of binary platforms on the Internet, which have the possibility of operating with the binaries. This increasing, in turn, caused the surge of negative reviews about the scam stimulation plans of such platforms.
Usually, a platform for binary options on the web will require putting in a certain amount to purchase a call or put option. For instance, it might be offered to purchase a option at a price of $50, which, in turn, offers prospects to payback half, if the value of the concrete company share will be higher than $5 at the expiry time. In case the result of the trade is satisfying, meaning the price of the mentioned company share is actually above the five-bucks mark at the particular moment, then the traders get their payback, and the option is regarded as “in the money”. However, in case the result is not satisfying and the option expires “out of the money”, the trader loses all his deposit. There are separate types of binary options trading, which may offer a customer to get a small portion of his deposit back in case of lost deal, for instance, 5%.
However, it is not a very often situation. Actually, there is a number of Internet platforms, which have a tendency to overestimate the average payback on a deposited sum, promoting a greater average return in comparison to what a trader is expecting according to the existing payback scheme. For example, as mentioned earlier, supposing a half-and-half possibility of succeeding, the return scheme was established in such a manner that the assumed payout on the deposited sum is, basically, negative, causing a net loss to the trader. The reason for that is the result, which, in case the option is expired unsuccessfully (a complete loss) strongly overbalances the case, when the option is committed successfully (a half is being paid out). That is to say, in the above mentioned case, the trader on average is assuming to lose his resources.
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