New to binaries?
Take a view on the performance of a financial market or future volatility levels with binary bets.
What is a binary bet?
A binary bet enables you to take a view on whether or not a particular event will occur. There are only two possible outcomes: 'yes' or 'no'.
Binary bets are priced between 0 and 100 based on several factors, mainly the time to expiry and underlying market price.
Quick Guide to Binary Betting
A binary market asks you a question on whether an event will occur – the only possible answers are
For example, on a FTSE® 100 UP you are being asked whether you think the FTSE® 100 will be above 5744.89 at 3.00pm
If you disagree, you 'sell' this market.
If you agree, you 'buy' this market.
As with all our markets, the price features a spread. But
with a binary, the price is displayed in a range between 0
and 100, such as 86.2-89.5. Here, you would 'buy' at
89.5 and 'sell' at 86.2.
These prices are dictated by the underlying market price
and the time to expiry. Therefore, the closer you get to
expiry, the closer the price will move to either 0 or 100.
However, the nature of a binary is that it magnifies very
small movements in the market. Therefore a sharp tick in
the underlying price close to an expiry time could cause the
binary price to move dramatically.
For example, if the underlying market price was at 5758 just
five minutes before the expiry of a FTSE® 100 UP at 3.00pm
[>5744.89] the binary price is likely to be close to 100 as the
chance of the binary expiring above 5744.89 is quite high.
However, if the FTSE® suddenly ticks down to 5743 and
the binary expires below 5744.89, the binary price will
instantly settle at 0 – potentially a massive swing.
Types of binaries
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.
Target
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.
Hi-Lo
A binary bet on whether the day's high or low will be a given distance from the previous closing level.
One Touch
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.
TUNnEL
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.
For a look at how particular binary types work, see our example.
Dealing Spreads
We offer a range of variable spreads on binary bets.
You can bet on weekly, daily, hourly, 20-minute and 5-minute binaries, as well as exotic binaries that can expire throughout the day if a certain price is met.
Nearly all binary bet markets will have a spread in the range of 4-6 points. As prices move towards 50-50 the spread will be closer to 6 and as prices move towards 0 or 100 the spread will tend to the lower end of the scale. Often, the spread will increase above the given range at the very end of a market if the price is close to 50-50.
Regulation
You should note that binary bets are not subject to regulation by the Financial Conduct Authority. See more information on responsible gambling. In respect of binary bets, IG Index Ltd is licensed and regulated by the Gambling Commission. Reference number 2628.
Spread bets are leveraged products. Spread betting may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.