Binary options have taken the world by storm in recent years and Canada is no exception; with ongoing economic uncertainty, investors are turning to less risky avenues in which to invest their money. Binary options are an ideal solution in that they provide traders an opportunity to turn in quick profits, with a high level of risk mitigation possible. This newer form of trading is quite unlike any other investment opportunity, where, traditionally, the risks involved vary widely and it takes months or longer to see profits.
What are Binary Options?
Part of the exotic options class, binary options are easy to understand. You can trade within all four asset classes (commodities, stocks, indices, and currencies) and unlike other forms of investment where you would buy or sell the share of an asset, binary options are about predicting the price direction of the underlying asset, which means that you never actually own a share of it.
At the outset of a trade, you know when the option expires, its strike price, your exact profit figure for a trade that finishes ‘in the money’ and how much you stand to lose if it finishes ‘out of the money’.
Returns are fixed regardless of how small or large the price movement is, and since you are made aware of the financial implications of a trade ahead of execution, you can calculate your risk accordingly. The most basic binary options trade involves purchasing either a call or a put option. If you believe the underlying asset’s price will move down, you buy a put option. If you believe it will move up, you buy a call option.
How to Get Involved as a Canadian Trader
In Canada, binary options have yet to be regulated. However, there are no legal issues preventing Canadian traders from signing up with a broker and starting to trade, which means that investors of the country have access to a wide array of brokers from all over the world.
As with any transaction that involves money, doing your research to choose the right broker that fits your trading style is important. Many licensed foreign brokers have solid reputations in the binary options industry and care to make the trading experience a great one for Canadian traders. You may also have the opportunity to benefit from promotional and bonus offers that can jumpstart your binary options education and skill levels, as well as your profit-making potential.
As a Canadian trader, you have access to various assets offered by your broker of choice. However, you must be aware that most Canadian assets – at the exception of the CAD currency – are not found on binary options platforms due to not having high liquidity and a large trading volume.
The popularity of binary options in Canada is on the rise, and with that comes better brokers and better trading offers specifically directed at Canadians. For any additional information about trading binary options in Canada, follow the links below.