Digital options, Call/Put options or Higher-Lower options, are the most widely traded options available on our platform. Traders are to determine whether the price of an asset will rise (call option) or fall (put option) before the predetermined expiry time.
When investing in a call (or higher) option, the trader predicts that the price of the chosen asset will be higher at expiry time than it was at the time the trade was made (strike rate).
An example: It is 12:00 and the trader puts a call option on the market-price of silver and the expiry time of this option is 14:00: the trader believes that the price of silver will go up over these two hours and will have return on his money if this is the case. If the price is lower at 14:00 than it was at 12:00 his investment will have failed, and he will lose the investment.
When a trader invests in a put (or lower) option, he predicts that the price of an asset will go down over the period between the time of his investment and the expiry time of the option.
If we take the first example: It is 12:00 and the trader puts a put option on the market-price of silver with an expiry time of 14:00. He is in the money when the price of silver is lower at 14:00 then it was at 12:00, and loses his investment when the price of silver is at a higher point.
How to buy a Digital option?
Follow these 7 steps to buy a Digital option:
1. Select the Digital option type in the traderoom.
2. Select an asset from the asset column on the left. As soon as you have selected an asset the prices of the asset will be shown in the chart.
3. Select the expiry time to set the duration of the option. By default the first possible expiry time will be chosen. Press on the displayed expiry time to choose from the drop-down list another available expiry time.
4. Select the Put button, when you expect a lower price per the expiry time, or the Call button, when you expect a higher price per the expiry time.
5. The New Trade window opens up after having select Put or Call. In this window you set the (4.) amount you want to invest in the option, the (5.) payout when winning/losing the trade, the (6.) amount of automatic trades you want to place, and the actual (8.) execution of the trade.
The New Trade window contains the following info that needs to be checked and fields to be inserted before pressing on (8.) Buy:
- Action: shows if your trade is a Call or Put option
- Strike Level: shows the strike rate for which you will purchase the option
- Expiry: shows the time at which the option will expire
- Amount: how much money you invest in the option?
- Payout: by default the maximum profit (when winning the trade) is selected, but you can get up to 20% of your invested money back in case you lose the trade.
- Auto Trade: by default you place 1 trade, but you can select to auto trade up to 5 times. When you select more than 1 auto trade, you will trade a number of consecutives trades until a trade has gone lost.
- In the money/Out of the money: shows you how much your payout will be in case of a winning (in the money) or a losing (out of the money) trade.
- Buy: Press the button to execute your trade
6. When your trade is executed a Green box is displayed in the top right of the traderoom, showing TRADE SUCCESSFUL.
7. You will now find the new trade back in your Open Trades.