Some of the complicated formulas come into play when pricing options. The price of an option will change constantly as the price of the underlying stock changes, and there is also something called "time premium" built into the value of an option. What this basically means is the longer an option has until expiration, Disrupt Trading the more extra price is added into its price. When you think about it this makes sense, as an option with an expiration date far into the future has more time available for the price of the underlying stock to move above the option's strike price. In other words, an option expiring in 5 minutes only has 5 minutes remaining for price to move above its strike price (if it hasn't already), but an option expiring in 5 days has a much greater chance of that happening.
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One way to look a binary options is to think of it as trading made simple. While many might take one look at the first word of binary options and seize up with fear over a word that clearly sounds like a math or technical / computer programming term, the truth is that these high return investments are far from being complex. The reality is that a more apt comparison would be that of a coin-flip.Once an investor seeking high return investments gets past the initial phobia associated with the technical name of the asset they quickly come to two conclusions. The first conclusion is that contracts of this kind have virtually all of the complexity stripped out of them. The second conclusion the trader comes to is that these are indeed very high return investments with quick turnover - making them both riskier and at the same time potentially more lucrative than your more traditional run-of-the-mill securities
