A trader must ask what is the difference between the regular option market and binary options, and there are some things to be taking into consideration:
- complexity: binary options are a simple way of trading options and are easy to understand when compared with the regular options market;
- strategies involved: there are many strategies involving regular options, while binary options are simply structured
So the main advantage of binary options are the simplicity of the process:
- select the asset you wish to trade;
- click up if you think the price will rise above the current level;
- click down if you think the price will fall below the current level;
- choose the investment amount you with to trade;
- choose the expiration date.
In other words, regular option market is far more complex then the binary options market and normally they should be considered two different forms of investing. A trader may choose to diversify his/her trading portfolio and this should be done by dividing the capital and trading each financial market. In this case, the possibility of hedging appears (might hedge the long term investment in stocks with short term speculation on binary options for example).