A Secure Investment Night Owl Signals for the Future

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This type of option is simply held by the purchaser until it expires with a predetermined profit or loss. The advertisements that describe a 90% profit simply describe an option deal whereby a 90% profit (or loss) would be generated if the underlying asset performs in the manner that you predict. For example, let's say the Dow Jones Industrial Average opens up at 16,501.Night Owl Signals You think it will close higher by the market close. So you decide to purchase a $500 call (upward price expectation) option with an end of day expiration. The day grinds to a close with the Dow closing up one point at 16,502. Your option contract appreciates in value by 90%. Thus, your $500 appreciates to $950. If the DOW closes down, you lose the contract and will lose most of your $500.

Some brokers will give you back 15% on losses. But this type of option is binary in nature, meaning you will either win or lose at the time of expiration. Some have described this type of option like throwing money on red or black at a casino. This is a fair description. Yet most option investors would like to believe they are much more skilled than gamblers who play the casinos. Binary options have been around for years as private over-the-counter deals. These exotic options were first introduced to the general public in 2008, when the brokers started offering the deals online. Today there are dozens of brokers who specialize in these exotic options. Most of these are located offshore in places like Cyprus and the British Virgin Islands.

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Are binary options legal? Like most legal subject areas, the answer is not simple. Most of the binary options brokers operate in locations outside of the jurisdiction of securities regulators. Some of them operate under casino gaming licenses. There is now a CySEC (Cyprus Security and Exchange Commission) which is attempting to regulate the industry for those brokers within that jurisdiction. In the United States there is a relatively new broker called NADEX (North American Derivative Exchange). This firm is fully regulated by the Commodities and Futures Trading Commission, a US government agency similar to the Securities and Exchange Commission.