You will learn about the following concepts
- Definition of one-touch options
- Only two possible outcomes
- Payout to be received once the barrier is broken
- Examples
In the following articles we will discuss more thoroughly the binary option types described in the previous article. Within the next few paragraphs you will learn about the one-touch binary option and you will also be provided with a short example to further clarify the topic.
Highest rewarding trades
This binary option variety has a fairly new type of investing structure that eliminates most of the guessing. One-touch binary options offer a unique kind of trading experience because all you need to do is to predict whether the asset will touch a predetermined price before it expires.
Let us assume that you forecast the movement correctly and the price of the asset hits the so-called “trigger” price. Your option then becomes “in-the-money” and you receive your payout, which varies depending on the broker and on the distance between the spot and the target price.
If you are convinced that the price of the asset will most certainly surpass a particular level, but you are unsure whether the price movement will be sustainable, then this is the right type of option to choose. A one-touch option becomes a winner as soon as the trigger is reached, disregarding what happens afterwards. Also, the closer the target price to the spot price is, the lower the payout be, and vice versa.
This type of binary options is also available to purchase with most brokers during the weekend, when markets are closed, and exceptional payouts might be provided. One-touch options during the weekend typically involve guessing whether the underlying asset will reach a certain price level within the next working week, or not.
Example
Let’s say you have chosen to trade the EUR/USD currency pair which has closed at 1.3500 on Friday. During the weekend you can purchase a one-touch option with expiration at next Fridays close and a trigger at 1.3600. In this case, if the EUR/USD pair rises to 1.3600 in the Monday-Friday time span, your option will be “in the money”. However, if it fails to do so, and for example reaches a weekly high of only 1.3580, then the option will be “out of the money” and you will lose your investment.