Binary Options Put (down) definition

Binary Options
 Put (down) definition

Binary put options are financial products that can be particularly interesting for investors and speculators. Buying binary put options that are out of the money with a lower premium is more pleasant than betting on particularly risky bets. It can make calculating downside risk easier than selling binary call options. They can be traded on various binary brokers using proper binary options risk management guides and indicators.

Good to know:
Selling binary call options is the same as buying binary put options with the same strike price & expiration date.

The underlying value of a binary put option

The underlying value of a binary put option, is also known as a downbeat or all-or-nothing option. It is settled at 100 if it is in the money (at expiration) or zero if it is out of the money.

The settlement price in this case can be determined in a number of ways. The two obvious solutions are that binary put options are treated as in-the-money or out-of-the-money and are settled at 100 or 0, respectively.

Binary call options vs. binary put options in comparison

When there is no cost-of-carry or when interest rates are zero, the price of binary put options can be seen as the probability that the price of the underlying asset will fall below the strike price.

Write a comment