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Making Money with Binary Options Trading

Binary Options Trading, High Leverage, and Basic Options Trading Tutorials


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High Rate Investments
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High rate investments for high return investing nearly always require leverage. With a few exceptions though it is possible to earn very high yields without the same kind of high risk leverage implies. We also look at lower maintenance leveraged ETFs which offer similar results with less maintenance.


High leverage investments offer the highest rates of return for a varying amount of risk. Check out this video and get the low down on the most commonly used high leverage investments available to low capital investors.


 

Options Trading as a Way to Create High Leverage


Options trading is one of the most popular high rate investments given it has the ability to create customized leverage for the day trader. Depending the ratio between the call or put premium on the option and the strike price of the option a trader can create virtually any leverage ratio imaginable provided there is a counter-party to the trade.

The great beauty of custom tailoring your own leverage position is that the investor chooses which security at which price and how much buying power (leverage) to execute. The greater the leverage ratio, the more chance of creating a high rate investment yield.

The downside of taking a high leverage position with an options contract is the potential for losing the entire investment - should the contract expire out of the money or the trader has to unload the contract for a loss.


High Rate Investing: Margin Trading


Buying Stocks on Margin or Treasuries - High Risk

Another high rate investing strategy is to buy on margin. What does buying on the margin mean? This is simply a case where a trader puts up some cash or other collateral to make a trade, and his broker puts up the remaining cash to cover the cost of the desired position.

For example: A stock trader might wish to buy $2000 worth of securities but only has $1000 cash. The trader may then buy the $2000 worth of securities, pledging the $1000 as collateral. His broker then lends him (essentially) the other $1000 to complete the trade. This would be a case of 50% margin, or a 2:1 leverage ratio. (more on margin trading and leverage).
 

Leveraged ETFs Offer High Yield without Margin


Another very popular high yield investment is called a leveraged ETF. What this type of investment does is uses margin to amplify the return on investment of the underlying asset - without YOU (the investor) having to open and maintain a margin account and positions. This is a great way to get higher yield with a low maintenance account. Be forewarned however, as losses (like any other leveraged investment) are amplified as well.


High Rate Investments without Margin

Binary Options

A last (and relatively new) form of high rate investment is the binary option. Binary options offer a high rate of return on a short duration investment (sometimes less than an hour). The beauty of this type of transaction is that the trade is done on a fixed dollar amount contract size with an extremely short expiration (hour, day, or week) and yields approximately 60-200% depending on the duration of the contract.

Binary options have become the investment du jour of day traders because of their quick turnover and instant high yield.


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