Binary Options: Trading or Gambling?

NEW YORK, NY, April 14, 2011 (Press-News.org) Ever since the devastating earthquake, tsunamis, and the subsequent nuclear crisis that have rocked Japan--not to mention the waves of discontent and revolution currently sweeping through the Middle East like a scirocco off the desert--speculation over the affects of these events upon global economics and trade has moved well beyond the strategic command centers of hedge funds and Forex exchanges to include the most volatile and potentially profitable trading platforms employed by today's active investors and traders.

Questions about the value of the Yen, the price of oil, and the future of certain high profile automotive, tech, and environmental stocks; along with questions about the very health of the U.S. economy, have given rise to a surge in options trading by the individual investor. Chief among these are the nouveau trading instruments known as online binary options and in recent weeks their volume has soared. These Internet trading platforms which have sprung up in the last few years and are now proliferating on an almost daily basis throughout the world, are today at the forefront of short-term options trading.

Offering the intrepid options enthusiast a fast and unusually high return on investment--sometimes in a matter of minutes for a 75% return or more--these "all-or-nothing" digital instruments are the hot new game on the Internet and are growing in popularity with the individual investor. Though binary options, also known as digital options, have been available Over the Counter for years, it is only since 2008 with their introduction by the American Stock Exchange and the Chicago Board Option Exchange that traders have begun to take notice.

For those who are unfamiliar, a binary option is one in which the trader assumes the position that a particular asset will either go up or down in value beyond a predetermined level, in a fixed period of time, with a predetermined payoff. In the minds of some, it is sort of like putting $100 on red at the roulette table, knowing that at the expiration of the option period (when the wheel stops spinning) you will either double your money or lose it all. Though that particular analogy may seem a bit simplistic, it is however, how many view the binary options market, and rightly so. Take the website, About.com, which defines binary options trading as, "gambling that can be used as an alternative to regular day trading;" or the company, binarybettingoptions.com, an online trading site which makes no bones about the business they are in. In fact, in the United Kingdom, the term "binary betting" is much more common than the phrases, "binary options" or "digital options," and most of the British binary options trading companies will let you "bet" on commodities, stocks, indices, and football.

Today, a Google search of "Binary Options Trading" brings score of results, most of them for off-shore websites with names like make300aday.com, optionrally.com, bestbinaryoptionstrading.com, anyoption.com, and winoptions.com. All of these websites have a number of things in common:

- They all have flashy banner ads that promise Big Profits, Easy Profits, Fast and Easy Returns, and the like
- They all are almost completely devoid of any Education, Market Analysis, Trading Tools and Strategies
- They all have all seen huge volume in recent weeks in Oil, Gold, and the USD/JPY currency pairing, in response to events in the Middle East and Japan.

At the other end of the spectrum of binary options trading companies are AMEX, now integrated into the New York Stock Exchange--now known as NYSE Euronext--the Chicago Board Option Exchange, and the Wall Street-based Banc De Binary, a global binary options enterprise with operations in Toronto, London, Milan, Madrid, Zurich, Athens, Sydney, and Tokyo.

What these companies have in common are:

- They never use the terms gambling, betting, winning, etc.
- They all recommend prudence and advise their customers of realistic risk/reward
- They all provide up to date market news and perspective and educational resources that enable the individual investor to trade options as opposed to betting on assets.

At AMEX, the first to get approval by regulators to offer binary options, they don't even use the term "Binary Options," preferring the descriptor, "Fixed Return Options," and at the CBOE, they pick their words very carefully and frequently speak of the utility of these instruments for established market participants.

According to Chicago Board Option Exchange Chairman and CEO William J. Brodsky, "CBOE's binary options provide a straightforward way for investors to act on their views of two of the most closely followed indexes in the world, the S&P 500 and the CBOE Volatility Index. These products will appeal to the broad range of market participants, including individual investors, hedge funds and institutions, who have an opinion, one way or another, on future price movements in SPX or the VIX."

At Banc De Binary, which was founded in the wake of the financial crisis that shook the global investment community at the end of the last decade, they are very clear on the distinction between trading and gambling.

"There are a great many fly-by-night Internet operations that are taking advantage of unwary investors by offering fast and easy returns simply by betting on the price movement of certain underlying asset. Some of these operators are nothing more than the next generation of online casinos, and investors should be cautious about these all-or-nothing trading vehicles," said Oren Laurent, CEO of Banc De Binary.

With a website that is rich in Education, Tools, Daily Market Analysis, Strategies and Advice, BDB offers an asset selection that goes far beyond both AMEX and CBOE, including options on stocks, indices, commodities, and Forex.

Still, binary options are not for everyone, and there are growing indications that this relatively new investment vehicle is attracting many of the same people who think they will get rich quick by buying lottery tickets, going to the track, or divining what will come up next--black or red?

Banc De Binary is a private online bank allowing trades to safely trade binary options 24/7 with a personal private broker. For more information please contact: info@bbinary.com.

Website: http://www.bbinary.com