Now many of the binary option brokers offer many kinds of options. This makes it difficult to choose for many traders. Both beginners and professionals. Well, in this case, many will be useful reading this article.

For amateurs, it will be useful to remember what option means. This is a contract that does not oblige, but gives the right to make a deal to buy or sell a certain number of assets at a certain time.

Options are divided into 2 main types: Call and Put. Call gives the right to purchase. Put is the right of sale. Combines these two types of options is the way of making profit on it. This profit is the difference between buying and selling these two kinds of options.

Options are also divided by “territorial units”:

  • American
  • European

Binary option trading platform: variety of option kinds

American options and European options, what to choose

Like all existing types of options, they are similar to each other. But this information for the trader will not be so valuable.

Then let’s look at their differences:

  • In our case, the main difference we take is the right to execute the contract In American options, the trader or the owner is given the opportunity to fulfill the obligations under the contract until the expiration of the option.
  • In European options, the same option is provided only after the expiration of the option. In other words, it will not be possible to complete the deal prematurely, as in the case of American options.

Based on this information, we can assess the risks involved in trading these types of options. Consequently, European options will be cheaper than American ones. Since the risk in the performance of trading operations for American options will be significantly lower. But, which type to use in trading – this is the business of every trader.

We all know that options have become very popular in America, after which the wave has reached European countries. Almost all types of stock options belong to a variety of American. And the indices have already learned to be well used in European countries.

The essence of Classic and traditional options

Classic options are not real contracts, they are contracts for the price difference of certain assets of “CFD”. And as already many of you have understood, they are not classed as traditional. All types of options that are listed in the article are derivative financial instruments. But the real contracts of them are only American and European, since CFD is income exclusively from the dynamics of price movements on a certain scale. Regarding real contracts, you do not purchase – CFDs and, accordingly, do not sell the underlying asset.

How does the process of trading classical and traditional options occur:

  • The minimum amount of assets to trade for traditional options is 100 units, for classical options 1 unit. Also the number may vary depending on the broker and the amount of the transaction.
  • Commissions and brokerage fees are imposed on all the traditional options, on the classic this is less common. Since the fact of buying and selling assets itself does not carry a trade transaction.
  • Compensation of additional broker’s expanses in traditional options is very low. In the classic, you can close the deal at break-even level and, most importantly, prematurely.

What conclusions can be drawn

As you have already read classic options have a number of advantages over American and European. The availability of trading of such options is much better than that of traditional ones. So, for everyone who has always wanted to try to trade classical options, feel free to do it.

We advise you to try trading on the IQ Option platform. Click on the button below to open a demo account.

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