A Binary bet is a type of volatility bet. If you believe a market is going to be volatile on a particular day, or over the next few weeks and months, volatility bets allow you to back your view by ‘buying’ volatility rather than ‘buying’ or ‘selling’ the underlying market.
Even if you are not certain which direction the market will go, it's possible to make money once there is an up move or a down move. At IG Index ‘volatility bets’ can be placed using Binaries and Options.
Binaries
Binaries are an exciting way to bet on directional moves, or future volatility levels, in the underlying market. IG Index invented Binary betting and continues to lead the market by offering more Binaries, on more markets, than anyone else.
What is a Binary Bet?
Binaries are a special type of bet that allow you to trade on the performance of a financial market over a specific time with only two possible outcomes, either settling at 0 or 100. For example, we might be quoting a Binary on whether the FTSE 100 will settle up on the day. If the event occurs (in this case, FTSE settling at a higher price than the previous day's close) the bet settles at 100; if it does not, the bet settles at 0. These are the only two possible settlement prices so your risk is strictly limited.
Why Binaries?
Binary betting brings even the dullest market to life. Small movements in the underlying market are magnified in the Binary price, particularly in the period just before expiry. Sharp movements are guaranteed near expiry as we know the price has to move the binary result towards either 0 or 100. This makes the Binary bet the ideal product for high-gain, short-term betting. Binaries also enable you to take a view purely on future volatility of the underlying market rather than simply directional movements. For example, if you believe the FTSE is going to move 50 points, but are unsure in what direction, you can use Binaries to back your judgement irrespective of whether the FTSE falls 50 points or rises 50 points. To learn more, see our Examples
Different types of Binary
Ladders: A Binary bet on whether the underlying market will finish above a stated level. For example, a ‘FTSE to be Above 5400 Ladder’ will settle at 100 if the FTSE finishes the day above 5400 and will settle at 0 if the FTSE finishes the day below 5400.
Targets: A Binary bet on whether a market will close the day in a certain range. For example, ‘FTSE to Finish Up 10-20’ will close at 100 if the FTSE finishes up between 10 and 20 points from the previous days closing level.
One Touches: A Binary bet on whether the market will touch or go through the barrier level at any time before the stated expiry. The market will settle at 100 if the level in question is breached before expiry time and will settle at 0 if the level is not breached before expiry time.
Tunnels: A Binary bet on whether the market will stay within two given barrier levels for the full period up to expiry. For example a ‘FTSE 100 Tunnel’ will settle at 100 if the FTSE stays within the +100 / -100 range for the whole trading day, but if it hits up 100 or down 100 at any point during the trading day the bet will settle at 0. Therefore when you buy a tunnel you are selling volatility and when you sell a tunnel you are buying volatility.
Hi-Lo’s: A Binary bet on whether the day's high or low will be a given distance from the previous closing level.
Markets
IG Index offers Binary bets on the following markets:
Indices: FTSE 100, Wall St, US Tech 100, US SPX500, Germany 30, Italy 40, France 40, Spain 35, Australia 200, Japan 225, Japan All Share, Hong Kong HS42, Korea 200, Taiwan All-Share, China H-Shares, Singapore Blue Chip, India 50.
Commodities:Gold, Silver and US Crude.
Forex: E/$, £/$, $/Y, $/SF, E/£ and A$/$.
Expiries:IG Index offers a range of expiry periods ranging from five-minute binaries on the FTSE, Dax and Dow, to monthly binaries on E/$ and £/$.
Regulation
You should note that Binary Trading is not subject to regulation by the Financial Services Authority. Please click for information on Responsible Gambling. In respect of Binary Bets, IG Index Ltd is licensed and regulated by the Gambling Commission. License number 066-002628-R-103649-002.