Trading Binary Options

I am curious as to whether or not anyone has experience in trading binary options. I think it is more akin to gambling than any other kind of trading. As I understand it, you basically bet whether or not a particular security will be above or below a certain level at a certain time. There may be other kinds of bets that can be made.

Please enjoy this Wizard of Odds page I wrote discussing different sorts of Binary Options:

https://wizardofodds.com/binary-options-abroad

It's a long one, but it covers a lot.

I'm pretty sure that another advantage of binary options compared to gambling is that you can claim a capital loss for the year on your taxes if for the entire year you have a net loss. You can't claim a yearly net loss from gambling, you can only claim losses to reduce the size of your win.

Excellent post by the Wizard!

So, it is important to understand that options are primarily intended to be used for hedging positions. If you are looking to trade options, you should really educate yourself first and start very small, as it is a game for the big boys with big capital. Yes, if you trade naked options, meaning taking one side of a trade only with no protection, this is straight up gambling and even worse.

There is typically no limit to how much you can invest/gamble on a trade... and it can all disappear overnight. And always remember, the person or large institution on the other side of the trade is sophisticated and deliberate in their strategies....and they have the large positions to be able to manipulate the timing of the stock move or non move. Yes, this does go on.

You can buy a 'call' option on an underlying stock on monday with expiration date on the following friday. You will pay a premium for that time value. Your stock can even go up from the price you bought it, and you can still lose everything if it doesnt reach the strike price. I like to sell the 'calls' or 'puts' and take in the premium. Then buy or sell the stock when or if near strike price. This is like being the ' house ' in my opinion.

Good luck and be very careful as it is not a get rich quick type of opportunity. The sharks on wall street are out to take your money.

You're referring to traditional options. This thread is about binary options. Binary options are completely different than traditional options.