One Touch Binary Options
One Touch Binary Options are a standard feature on most platforms. There are several different types of One Touch options which vary according to broker. In general a one touch option is a prediction as to whether an asset will reach a certain price point in a given time. If it touches the price even for an instant you win the trade. If the time expires and the asset never reached the price point you lose the trade.
Some one touch options are high yield, long term options, lasting up to a week.
The above screen shot is a TradeRush high yield one touch option. In this example if you purchase the One Touch Call, the price must reach 3523 before the expiration time. Note that the option time frame is for over 2 days and it yields 510% on your investment.
One Touch/No Touch Options
Other brokers such as 24option offer One Touch/No Touch options, where you are given the choice to select whether the asset will touch a certain price point or not touch the price within a time frame.
The above screen shot represents a Touch/No Touch trade. In this case you can choose whether the asset will Touch or Not Touch the target price of 1.01715. As you can see the return is 66% and the expiry is the same day much like a standard binary option.
These brokers offer the aforementioned high yield touch as well on their platforms.
As you can see there are a variety of One Touch options to choose from. Some are high yield and more risky, while others provide a return and time frame more comparable to standard binary options. It would depend on the type and strategy you employ and your risk tolerance to decide which type to choose from.
One Touch Option Pricing and Returns
These touch options usually offer a substantially higher return payout than standard options, and can be very attractive. The important thing to understand here is why? Pricing for touch options is based much more on a standard probability calculation considering an asset’s trading range than normal binary options. In simple english – since the option only has to “touch” a certain value it doesn’t matter how much the asset is worth at the end of the expiry. The only check is if it was worth that value at ANY point during the trading time. So unlike normal binary pricing which is modeled on exactly what an asset WILL be at a SPECIFIC point in time, one touch prices only consider the range the asset was in.
This is an easier statistical model to calculate and predict. Essentially brokers determine the range an asset is trading in usual standard analysis and then set an option price outside of this range. Because the chance of winning the trade is so low brokers offer what seems like a generous payout. So for most people this is an exciting trade option with the chance to win big. The thing to bear in mind here is that the payout is ALWAYS less than the chance of winning e.g a 500% payout will probably only have a 1 in 7 to 1 in 10 chance of winning.
If, however, you understand well or follow the asset that’s trading you could improve the odds by taking advantage of a change in market conditions after the initial one touch option was setup by the broker. For example a news announcement or natural disaster that affects a major supplier. Generally speaking, the touch options with the best chance of winning are those with the highest natural volatility. Since the returns on these options are so high, a little bit of research can really go a long way. Try these out for yourself here