One Touch Binary Bets - Example

• A one-touch bet means that if the market in question touches a certain level then the Binary Bet settles at 100 right there and then
• The FTSE 100 is unchanged at lunchtime
• For whatever reason you expect the release of a US economic figure at 3pm London time to create some havoc in the market
• The one-touch Binary bet for FTSE 40 points UP is trading at 5-8, you buy it at 8 points risking £5 a point
• Note, this is neither an UP or a DOWN bet, rather a bet that will settle at 100 if and when the FTSE attains a level of 40 points higher during the day, where the market finally closes for the day is immaterial
• Surprise surprise you're right! The US figure creates a wave of buying on Wall Street and FTSE shoots up over 50 points in under an hour
• The one touch level (40 point up) is triggered and the Binary Bet settles at 100 giving you a fantastic profit of 100-8 = 92 x £5 = £460
• After fully digesting the US figure the markets take a dive with FTSE giving back all of its gains to close down 5 on the day
• Too bad, the One Touch has already been settled and therefore it's irrelevant what happens to the index afterwards

Range Binary Bets - Example

• A standard Binary bet has advantages and disadvantages. If you buy the Binary UP bet for a certain market and that market closes higher by just a single point then the Binary will settle at 100
• However you don't get paid anymore if the market in question settles 50 or 100 points higher
• Range Bets therefore bridge this gap
• You're very bullish on the FTSE 100 thinking it will close at least 50 points higher
• Instead of buying the simple FTSE UP Binary Bet you buy the FTSE +40 Range Binary
• The bet will settle at 100 only if the FTSE closes greater than 40 higher
• The range bet will thus be considerably cheaper to buy (perhaps by as much as 75%) than the standard UP bet because it needs in this case 40 points of strength versus a minimum of just 1 point
• Range Binary Bets therefore have similar characteristics to out-of-the-money options
• There is also another type of Range Bet and this is where one is speculating on a market closing within a certain range, perhaps the FTSE higher than 40 points but not higher than 50 points, a so called FTSE +40/+50 Range Bet
• If the market is 39 better by the end of the day the Binary bet will settle at zero, if anywhere from 40-50 better the Binary settles at 100 point but if greater than 50.1 the Binary will settle at zero
• This may seem very restrictive and it is, but a) the bet will normally be quoted at a very low level and b) by shorting the market you can always bet against the proposition