The Cash or Nothing option is the most traded variant of binary options. Also known as, the “all or nothing” option does justice to its name. Trade with the cash or Nothing option is either successful or not. Binary options trading is not with real instruments, but rather represent a forecast on the future value and market development.

The price performance of the underlying asset and the market trends when trading binary options predicted by the investor. The Cash or Nothing option is employing either on rising or on falling prices. From this derives, therefore, logically, the “all or nothing” from, because this is the underlying principle of this option: If the investor is wrong with his assessment of the market, the option expires and the capital invested is lost.

He is right, however, and estimates the price performance of the underlying correctly, the cash or nothing option “in the money”. The investor receives now in advance specified fixed dividend. Situation is different in the asset-or-nothing option. The Cash or Nothing option is also available as an option with a fixed rate of return. This designation is only partially correct. Although the yield is fixed, but a guaranteed payout does not exist. The term cash or nothing also includes the possible risk of loss on an incorrect assessment of the market.

Market price and option strategy

The Cash or Nothing option, the forecast of the market development and thus the prediction of the future market price of the underlying asset. It represents the development of the course where the development of the market levels are crucial for the option strategy. The investor chooses the underlying on which it purchases the cash or nothing option. Then the decision is made for a long or short option.

Whether a put or a call option is purchased, depending on the expected market development. The option strategy of the buyer determines the form of cash or nothing option. The strategy of the investor depends on the expected market development. The rise or falling prices of the traded underlying determine whether cash or Nothing option is purchased as a buy or sell option.

The holder of the option speculating on a rise in the purchase option price. The buyer of a put option speculates however on a falling price of the underlying.


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