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One-Touch Options explained

 

We are well aware of the different trading strategies that are widely applied in the field of binary option trading. Also, depending on the condition of the financial market at any given point of time, the trader is required to select the type of move that will yield the best results. In this article, we will discuss about the well known “One Touch Option” and also “Double One Touch Option”. So, read on for better insight.

One Touch Option - What is it

This is basically a type of exotic option wherein an investor or a trader receives a payout in the event the value or the price of the underlying asset exceeds or attains a predefined level or so called barrier. This particular type of option also allows a trader to fix the so called barrier position, the amount of payout he is entitled to receive, and the expiration date/time in case the fixed barrier or level is reached in the trade.

 
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With this type of option, you can expect 2 results, namely, the first, when the predetermined level or barrier is attained and you get the full payout that was decided upon when you started the trade and second, when the value you had fixed is not attained and you lose all your investment when you had started trading with the broker.

Who benefits from One Touch Option?

If you are a trader that believes that the price of the underlying asset that you have set upon will be reached but if you are not certain whether or not this very price will sustain when it is attained will be most benefited from One Touch Option. Owing to the fact that this type of option has only one particular hurdle to be exceeded makes it less expensive as compared to the so called Double One Touch Option, which is explained below.

Double One Touch Option

Unlike the One Touch Option, in Double One Touch Option, any one of the 2 barriers or predetermined levels has to be exceeded or attained. If you are a trader and have invested money in this type of option, you will earn profits from the trade if any one of the 2 barriers is reached. You will have to predict the expiration time and the payout amount if the price exceeds one of the levels anticipated. And this price of the underlying asset has to reach prior to the expiration time or date.

In the event, none of the barriers are exceeded/reached/attained, you lose all the investment you have made in the deal/trade. But you don’t have to be disappointed by hearing that you will lose all your investment. Instead you can always be lucky if you are able to sign up with a broker that promises to give you a kind of compensation that will to some extent help you to recover the investment that you have lost in the trade. The concept of Double One Touch Option can be better understood with the following example.

Let us say that the rate of USD/EUR is around 1.50. A trader that uses the Double One Touch Option will set 2 levels or so called barriers at 1.49 and 1.51. In the event the price of the underlying asset that has been predicted exceeds anyone of the barriers prior to expiration date/time, you are said to win or benefit from the trade. On the contrary, if the price remains or oscillates between these 2 ranges, you lose your investment money.

Remember, your success in binary option trading depends to a great extent on the trading platform or broker that you choose. A good broker means you have won half the battle already.

 
 
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