The flip side of earning a high yield if the trade lands in the money is the high risk associated with having the trade expire out of the money. Slingly This is a substantial risk when dealing with binary options. The lure of course then is to offer yields high enough to compensate for the elevated level of risk, in most cases this means 60-80% on most contracts. This is high risk trading made simple for those wishing to try to earn high returns in a short period of time. So people attempt to profit from buying and selling options in much the same way that they try to profit from buying and selling stock, with different strategies based on whether they think price will go up or down in the future.

Options trading tends to confuse many people, especially people who are new to investing and trading. While there are complex formulas involved in options trading, almost all of that stuff takes place behind the scenes and the person doing the trading doesn't really need to know any of it. In theory, options are very simple: they are basically a bet that, as of a certain time in the future, the price of a stock will be above or below a specified price (called the strike price).