Binary 0-100 is an advanced form of binary options which allows real traders to earn huge profits in very short time periods. Like traditional binary positions (high / Low), a 0-100 option only have two possible values at expiration; either all or nothing. But unlike traditional binary options, 0-100 options are either worth $0 or $100, not a percentage increase of your investment amount like 100$ + 80% profit.
0-100 options trade in lots and the strike prices are predetermined. A 0-100 binary option thus takes the form of an event, “EUR/USD above 1.1323 @ 9:45”, for example. You can either decide to Buy this event if you believe it will realize or Sell this event if you believe the EUR/USD will be below this strike at expiry of the option. With Binary 0-100, the payout (achievable profit) and the option value changes every second and the value of the option will always be inside the $0 – $100 range:
- When you BUY the event, you risk the purchase price of the option and your profit at expiry will be the difference between this purchase price and $100 multiplied by the number of lots you bought.
- When you sell the event, you risk the difference between $100 and the selling price. At expiry, if the event does not occur, you will earn the selling price multiplied by the number of lots you sold.
- You can close your position at any time (sell back or buy back) and your profit will be the difference between the selling price and the purchase price multiplied by the number of lots.
Concrete example of a 0-100 binary option
Nothing speaks better than a concrete example when it comes to understand a financial product. Binary 0-100 are a little more complex that traditional binary options but as soon as you get the basics it becomes a lot easier.
On the above example, the characteristics are the followings:
- the event: “EUR/USD above 1.1371 at 10:45”
- current (spot) EUR/USD rate is 1.1370
- current time 10:17
- number of lots: 10
- Purchase price: €51.6 – Risk: 51.6 x 10 lots = €516 – Profit: (100 – 51.6 = 48.4) x 10 lots = €484
- Selling price: €41.7 – Risk: (100 – 41.7 = 58.3) x 10 lots = €583 – Profit: 41.7 x 10 lots = €417
If you BUY the option and EUR/USD is above 1.1371 at 10:45, you receive a profit of €484 + your invested amount of €516. You thus generate a performance of 484/516 = 93.80% as indicated in the above screenshot. If you BUY the option and EUR/USD is below 1.1371 at 10:45, you lose your invested amount €516. This is why it is called the max risk.
If you SELL the option and EUR/USD is above 1.1371 at 10:45, you lose your invested amount of €583. This is why it is called the max risk. If you SELL the option and EUR/USD is below1.1371 at 10:45, you receive a profit of €417 + your invested amount of €583. You thus generate a performance of 417/583 = 71.53% as indicated in the above screenshot
The returns are quite reasonable on the above example as the spot EUR/USD rate (1.1370) is really close from the option strike (1.1371) and as there is still 28 minutes until the option expiry. When the spot asset price is further away from the strike, the proposed returned on an Out-of-The-Money option can easily reach several hundreds of percentage points.
Differences with traditional binary options
With traditional High Low binary options, the payout and the return on loss are fixed and you simply have to choose a direction and a notional amount for your trade. Only the strike will vary every second to match the spot price. Once you open the position the spot price becomes the strike and you will profit if the asset price is higher or lower than this strike at maturity depending on the direction you chose.
With Binary 0-100 the strike and the direction of the trade are fixed in the event description. You can either choose to BUY or SELL this event and it is the potential payout that will vary over-time. Of course the further in-the-money the option, the higher the purchase price will be and the lower the achievable max profit. On the opposite, the further Out-of-The-Money the option, the lower the purchase price will be and the higher the achievable max profit.
Also, compared to traditional binary options, this trading instrument doesn’t have many options to choose from. You will likely have a maximum of 10 events to choose from that will all be limited to the most popular forex pairs (EUR/USD, USD/GBP) and commodities (Gold, Oil).
Advantages of binary 0-100 options
Binary 0-100 options offer the potential for much larger returns. As you may understand by now, binary options’ trading is all about leverage. It is this leverage that enables you to make huge profits with a little amount of available cash. It is the benefit you receive for taking the risk of trading a speculative position. Traditional binary options offer good leverages, up to 90% for the most traded high/low binary options and up to 300% or more for more complex option types like one touch or range options. With 0-100 Binary, you can achieve returns of more than 1’000%. Consider that you buy a far Out-of-The-Money Option for $5 and that the underlying asset suddenly surge, the option price can reach $90 at expiry. Your profit will be 90 – 5 = $85, representing a performance of 1’700% on your invested amount.
As we mentioned it above, 0-100 binary are also dynamically tradable, meaning you can close your position whenever you want. While most binary options brokers propose an early closure trading functionality on their trading platform, most of the times you’ll have to open a new window and ask for a sell back quote. This delay of just several seconds can generate big losses with binary option. 0-100 binary positions can be opened and closed in one click. The one click trading functionality represents a major advantage for short-term traders, no confirmation pop up will show up, the moment you click the button BUY or SELL the trade is done.
There is also a credit advantage to trade 0-100 binary options. Traditional options binary options are strictly debit position. You either buy a call or buy a put and the invested amount is debited from your account. With 0-100 binary, you can actually SELL an option and receive the related notional amount on your trading account. Nevertheless, you may have to buy it back at a higher price in the future. This is why most brokers will require you to have a lot of available cash amount on your account to be able to sell a 0-100 option.
The recommend binary options broker from our ranking that proposes 0-100 binary for european investors is Anyoption. Don’t hesitate to have a look at our detailed review of AnyOption for further information on the broker and use the below secure link to access its website.