One of the less known high rate investments is the binary options trade. With a typical payout in the sixty to seventy five percent (60-75%) range and a holding period in many cases of less than an hour it is among the highest yielding investments ever created. I can’t even begin to try to compute what the compounding rate of return on a binary option would be.
When Thinking of High Rate Investments, Do You Think of…
When people typically think of high rate investments they think of perhaps day trading forex on margin, or buying stock options, or perhaps buying penny stocks but in truth none of these investments can be traded with the consistency and yield of a binary option trade. The key to understanding what makes a binary option different is that all of the elements of the contract are fixed at purchase. The strike price equals the spot price at purchase. The expiration is at the top of the hour or the end of the day. The payout is a fixed percentage depending on the amount invested and whether the trade is a in the money or out of the money result. Nothing is left to chance except the binary nature of the result – in the money or out of the money.
What Other Types of Fixed Return Investments Have Similar Structure?
The only similar investment that comes to mind in terms of its rigid structure is a bank CD, which has a fixed payout based on amount invested and a percentage yield set at initial purchase. Having said that, I don’t think anyone will ever confuse a CD with high rate investments.
Check out some examples of how binary options act as high rate investments, and compare them to other similar but unpredictable and highly leveraged high rate of return investments.
Steve B. Wise
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