American Stock Exchange Begins Trading "Binary Options" on May 8

[Mark]

Hi, all

When you are preparing FM, you will need to know all kinds of basic
derviatives. There is a news about new financial derviative, Binary
Options. American Stock Exchange, seeking to boost options trading by
individual investors, plans to trade binary options on May 8.

What is binary option?

From Wikipedia, the free encyclopedia

In finance, a binary option is a type of option where the payoff is
either some fixed amount of some asset or nothing at all. The two
main
types of binary options are the "cash-or-nothing binary option" and
the "asset-or-nothing binary option". The cash-or-nothing binary
option pays some fixed amount of cash if the option expires in-the-
money while the asset-or-nothing pays the value of the underlying
security. Thus, the options are binary in nature because there are
only two possible outcomes. They are also called all-or-nothing
options or digital options.

For example, a purchase is made of a binary cash-or-nothing call
option on XYZ Corp's stock struck at $100 with a binary payoff of
$1000. Then, if at the future maturity date, the stock is trading at
or above $100, $1000 is received. If its stock is trading below $100,
nothing is received.


If you want to make more knowledge aobut binary option, you can check
the following website:http://www.riskglossary.com/link/
binary_option.htm