Binary Options Terms and Conditions

General Information

Binary Options (“BO”) are Over the Counter (“OTC”) derivative financial instruments which provide an investor with the ability to invest a fixed amount of funds and realise a predetermined return on investment depending on the outcome of a price movement of a specific underlying asset, within a predetermined time-frame. The “outcome” is of a “Yes/No or Draw” type of a certain event (for example, after a certain amount of time passes, will the price of the underlying asset be above or below a predetermined level - “Yes or No”, or alternatively will it be the same as the predetermined level - “Draw”).

Binary Options Trading at GDMFX

GDMFX offers its customers the ability to trade Binary Options online through the use of the Internet Trading Platforms provided by the Company. As such, the same risks associated with online trading of Leveraged Instruments to a great extent will also apply to the online trading of Binary Options. Therefore, all Customers are explicitly advised that the Order Execution Policy and Risk Disclosure of GDMFX, together with all other legal documents of the Company, which together form its Terms of Business and Client Agreement shall also apply to Binary Options and all services provided in connection thereof. Notwithstanding the above, notable exceptions and differences between Binary Options and the Leveraged Products offered by GDMFX shall be stipulated in the present document and shall prevail over the other legal documents of GDMFX when it comes to Binary Option Instruments and related services.

Trading Platforms and Differences in Price Feeds

GDMFX offers Binary Options trading on different platforms. The available Trading Account Types and Binary Option Instruments and their properties are platform-specific. Certain Account Types and Option Types, for example, shall be available only under a certain trading platform and not under any other system. General information about the available Trading Platforms and their associated Trading Account Types and Trading Instruments shall be published on the website of the Company for general guidance only. Customers are warned that any such information published on the website of the Company is of indicative nature only and is not guaranteed. Customers are explicitly advised to login directly to their chosen Trading Platform in order to see the most accurate information for the available Trading Instruments and their properties. 

All Customers are explicitly warned that the different Trading Platforms offered by GDMFX can be connected to different liquidity providers or quote providers due to many factors, including differences in technology, or differences in the offered Trading Instruments and their properties. Additionally, the Foreign Exchange OTC market is not centralized and as a result, different liquidity providers or quote providers can offer a different quote for the same underlying asset at the same point in time. It is therefore important to take note that, however unlikely, the prices quoted by the different platforms of GDMFX and the sequence of their changes might show variations especially under extraordinary market conditions.

In simple terms, it is possible for the different Binary Options Platforms of GDMFX to quote different prices from platform to platform at the same point in time, for one and the same instrument, due to the fact that they are connected to different liquidity or quote providers. All Customers are warned that GDMFX has no control over such variations and their occurrence is considered normal especially during periods of higher volatility on the underlying markets.   

Definitions

  • Price/current price: when referring to the current price or simply “price” of an instrument herein unless otherwise specified, it is always relating to the current price level formed from the Bid and Ask prices of the underlying asset ((Bid + Ask)/2) which are the closest price offers to that point in time.

  • Open price: the price level in relation to which the outcome of the trade would be determined at the time of expiry of the option. It is calculated from the Bid and Ask prices of the underlying asset ((Bid + Ask)/2) which are the closest price offers to the opening time/purchase time of the option.

  • Expiry price: the price level of the underlying asset calculated at the time of expiry of the option, formed from the Bid and Ask prices of the underlying asset ((Bid + Ask)/2) which are the closest price offers to that point in time.

  • Purchase price: Binary Options are purchased at a fixed price determined by the Client (the investment amount).

  • Return: the return of the option at expiry is calculated as a percentage of the purchase price (investment amount), depending on whether the option expires “in the money” or “out of the money”. The return percentage varies depending on market conditions, the underlying asset and the account type. It is displayed in the Trading Platform and once an Option is purchased, its return percentage at the time of the purchase becomes fixed until the expiry of the Option. 

  • Position types

    • Call: In general this is a Binary Option that yields a profit for the Investor when the Expiry price of the Underlying Asset is higher than the Opening price. Call Binary Options are for those clients who are bullish and anticipate the Underlying market to “go up” in a specific timeframe. In Binary Options trading, Call Positions are often referred to as Buy Positions. Determining whether a Call position yields a profit or loss is highly dependent on the type of Binary Options itself, described below;

    • Put: In general this is a Binary Option that yields a profit for the Investor when the Expiry price of the Underlying Asset is lower than the Opening price. Put Binary Options are for those clients who are bearish and anticipate the Underlying market to “go down” in a specific timeframe. In Binary Options trading, Put Positions are often referred to as Sell Positions. Determining whether a Put position yields a profit or loss is highly dependent on the type of Binary Options itself, described below.        

Types of Binary Options

  • Turbo Options: this is a Binary Option which expires after a fixed number of seconds, minutes or hours have passed since the option was purchased.  The investor can choose the time until expiry when opening the position. Depending on where the current price of the Underlying asset is, each Turbo Option can be classified in the following way:

    • In the money (Win): if the current price of the underlying asset is higher in the case of a Call(Buy) position, or lower in the case of a Put(Sell) position, than the Opening price, then the Option is considered to be In the money. If the Option expires in the money, it will result in profit for the investor;

    • Out of the money (Loss): if the current price of the underlying asset is lower in the case of a Call(Buy) position, or higher in the case of a Put(Sell) position, than the Opening price, then the Option is considered to be Out of the money. If the Option expires out of the money, it will result in a loss for the investor;

    • At the money (Draw): if the current price of the underlying asset is the same as the Opening price, regardless of whether it is a Call or Put position, the option is considered to be at the money. If the Option expires at the money (Draw), the investor receives his invested amount back (purchase price of the option).

Examples:

  • Investor A buys a Put option for 100 USD (purchase price). He/she anticipated the price of EUR to collapse so so he/she purchased an option on EURUSD with an expiry of 60 seconds and a payout of 180%, at 15:03:23 when the current price is 1.0920 (opening price). At 15:04:23 the price of EURUSD is 1.0917 (expiry price). This position expires in the money and therefore the investor receives 100 * 180% = 180 USD. Less the purchase price of the Option, this leaves the investor with a Net profit of 80 USD, or 80% return;

  • Investor B buys a Call option for 50 USD on GBPUSD in anticipation of the price of GBP to go up. The chosen expiry is 60 seconds and at the opening time 13:08:45 the price is 1.2654. At 13:09:45 the price of GBPUSD is 1.2648. This position expires out of the money and therefore the investor loses the price he/she paid for the option (purchase price);

  • Investor C pays 200 USD to buy a Call option (in anticipation of the price to go up) with an expiry of 5 minutes on USDJPY at 17:28:17 when the price is 114.41. At 17:33:17 the price of USDJPY is 114.41. This position expires at the money and its outcome is a draw. The investor receives back the price of 200 USD that he/she paid for the option (purchase price).

  • Digital Options: similar to the Turbo Option. The only difference is that the investor chooses expiry times from a list of predetermined times (for example an expiry at 10:15 as opposed to an expiry of 5 minutes in the case of a Turbo option);

  • Range Options: an investor can invest on whether the price will be either IN or OUT of a predefined price range at a predetermined expiry time. Instead of choosing either a Call or Put position, when trading with Range options the investor chooses between IN and OUT positions. The possible outcomes are:

    • In the money: an IN position expires in the money (win) when the price of the underlying asset is inside the predetermined price range. Conversely, an OUT position expires in the money when the price at expiry is outside the predetermined price range

    • Out of the money: an IN position expires out of the money (loss) when the price of the underlying asset is outside the predetermined price range. Conversely, an OUT position expires out of the money when the price at expiry is inside the predetermined price range

    • At the money: if the price at expiry is either at the lower or the upper boundary of the predetermined price range, the option expires at the money (draw), regardless of whether the option is of an IN or OUT type;

  • Touch Options: an investment is made on whether the price will reach either a higher specified level (Up) or a lower specified level (Down) within a predetermined expiry time.

    • Example: an Investor pays 20 USD to buy a Touch Down option on EURUSD at 15:31 when the price is 1.0902, with a Touch Down price of 1.0890 and expiry at 15:45. The payout is 240%. At 15:36 the current price of EURUSD is 1.0890. Since the option has reached the specified price level, the option expires in the money immediately and the investor receives 20 USD * 240% = 48 USD. The net return for this position is therefore 48 - 20 = 28 USD (140%).

  • Advanced Options: an investment is made on whether the price will be above (Call option) or below (Put option) the opening price after an investor-predefined number of minutes/hours. Similar to the Turbo option, whereby the difference is that on the Advanced option the investor can choose a trade-off between a “Payout” and “Return”.             “Payout” is the money investor will get if the option expires in the money, and “Return” in the context of an Advanced option, is the money investor gets back in case the option expires out of the money;

  • 5 ticks: an investment is made on whether the price after 5 ticks (new prices) will be above(UP position) or below (DOWN position) the opening price.
     

Order execution

GDMFX reserves the rights to cancel Binary Options trades for which there are no new quotes on the traded asset for the last 30 seconds before the option expires, in the event that such lack of new quotes is not due to technical issues. Such lack of new quotes is typical for periods of low market liquidity. The amount paid for a Binary Option which is cancelled, is returned to the Customer.

Frequently Asked Questions

Question

Answer

What are Binary Options?

Binary Options are over-the-counter (“OTC”) options that pay a pre-determined, fixed amount, depending on whether or not a financial event occurs by a certain time.

What is a Position?

A Position is a Binary Option purchased by you under your Client Agreement. Position can sometimes be referred to as a Trade. A position is considered to be opened until the option expires, and closed after that

A Binary Option is issued “over the counter”. What does this mean?

Over the counter (“OTC”) means that you do not trade in Binary Options through an exchange or market; rather, it is a transaction between you and GDMFX.

What is the minimum deposit to open a Binary account?

It depends on your choice of account type. Please refer to the Binary account specifications page on www.GDMFX.com

Are there any Swap Charges?

There are no Swaps or other charges associated with Binary Options. Your only cost is the price that you pay to purchase the Binary Option. It is reimbursed in full in case of a Draw or a winning position.

What are the Margin requirements?

Binary Options are derivative instruments but they are not traded on margin. You cannot lose more than the invested amount. Financial leverage is not applicable to Binary Options.

What are the minimal and maximal investment amounts in one Binary Option position?

Depending on the option type, account type, underlying asset and the current market conditions, Binary Options can be purchased for amounts ranging from 5 up to 2000 USD

What is the maximum investment amount for all open binary option positions?

This depends on the option type, account type, underlying asset and the current market conditions and can be up to 5000 USD

Where can I see the Binary Options offered and their conditions?

Please visit the Spreads and Contracts section of our website www.GDMFX.com