Custom Options examples
Custom Options provide you with a number of different ways to create customised positions.
Fast Options enable you to choose whether you think an underlying market will be higher or lower than its current level at your chosen expiry point.
The FTSE 100 is currently trading at 5300. You believe it will be higher after the next five trading minutes. You decide to pay a premium of £55.
The option expires after five minutes and the FTSE 100 has reached 5311, meaning you were correct. You receive the maximum possible payout, which is £105. This includes your £55 premium, so your net profit is £50. If the FTSE 100 had moved lower, you would have lost your premium of £55.
Binary Options are an exciting way to trade in both fast- and slow-moving markets. Simply choose a level and a timeframe, then pick whether a market will be higher or lower than this level when the option expires.
OneTouch Options are suitable if you think your chosen market will touch a particular level before a specified expiry time. If the market reaches this level before the option expires, you receive the payout. If it doesn't, you lose your premium.
EUR/USD is currently trading at 1.3330. You believe it will go up to at least 1.3340 in the next three trading hours and you would like a payout of £500. This requires you to pay a premium of £100.
You are proved right. After two hours EUR/USD goes through 1.3340. The position instantly closes and you receive a payout of £500 (which includes your initial premium).
However, if EUR/USD had failed to reach 1.3340 before the option expired, you would have lost your £100 premium.
Our NoTouch options enable you to set a level you think a market will fail to reach before expiry. If the market touches this level during the specified timeframe, the trade will close and you lose your premium. If it doesn't, you will receive the full payout.
Imagine GBP/USD is currently trading at 1.6000. You believe it won’t go higher than 1.6030 in the next four hours. You are prepared to risk £300 on this option, which will generate a maximum payout of £700.
You are proved wrong. After two hours GBP/USD goes through 1.6030. The position closes and you lose your £300 premium.
If GBP/USD had not touched or gone through 1.6030 before the option expired, you would have received the maximum payout of £700 (which includes the £300 premium).
Binary Range options ask you to define an expiry range for a market between 'floor' and 'ceiling' strike prices. If the market level is between the two strike prices when the option expires, you receive the payout. If it is outside this range when the option expires, you lose your premium.
Wall Street is currently trading at 11,900. You don't believe it will move much from this level in the next 48 hours. You decide to risk £500 that Wall Street will be above 11,800 (the ‘floor’ level) and below 12,000 (the ‘ceiling’ level) two days from now. If you are right your payout will be £1700 (including the initial premium). If you are wrong you will lose your £500 premium.
48 hours later Wall Street has fallen slightly to 11,840. As this is still above your floor level of 11,800, you receive the maximum payout of £1700.
Even if Wall Street had fallen below 11,800 during the 48-hour period and then rallied back to within your range when the option expired, you would still have received the full payout.
CFDs are leveraged products. CFD trading 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.