THE HOT WINDOW
What are All-or-Nothing Options?
In the binary options industry, there's a lot of confusion around the term all-or-nothing, so we decided to shed some light on this issue.
During the early stages of binary options, every trade was all-or-nothing. When an option finished in-the-money, a trader would receive a payout that included the pre-determined amount along with the initial investment. However, if the option finished out-of-the-money, a trader would lose the entire amount he or she originally invested.
Today, many brokers return 15% of the original investment for out-of-the-money options. As the industry evolves, new brokerages will offer similar or unique perks for out-of-the-money trades with the hopes of attracting new traders. It's easy to understand how traders from the earlier period of binary options trading can become confused with the many changes the industry has experienced, and we're sure, many new ones will follow.
As the name also implies, no commissions are taken on the winnings of binary options trading. With traditional options, this has never been the case. In traditional options trading, commissions and fees are always deducted from winnings, lowering the traders' profit, and in some cases, by several percentage points.
Many online sources claim that binary options replaced all-or-nothing options, and the claim is incorrect. The only thing that's changed are the rules that define what out-of-the-money options mean to different brokers. And for a trader, who's looking to receive the maximum benefits from his or her trades, always consider making trades through a broker who offers a percentage of your money back for out-of-the-money options.
The Bottom Line
Changes like these that arise manly from the increase in completion between brokers, only benefits traders. In this case, a trader can reduce the risk in every investment, and we're quite sure many new and more attractive benefits will be offered by brokers in the future. Nowadays, traders should make it a habit to browse through brokers and always see what their latest offerings are, even if they're comfortable with the broker they currently have. By doing so, a trader stays ahead of the game, and evolves with the times, as the industry continues to offer features it never offered before.