Supplementing your income when you are retired, or before you have retired, can often be challenging, especially if you haven’t been looking forward to retirement. You’ll probably know a fair bit about pensions, especially if you have a private as well as the state pension, and you will also probably know something about investment options. One way of working to add to your income is to look at the potential for trading the fluctuation in prices in the global marketplace. Known as binary options, these are not traditional opportunities for investment. As with most investments, they can reward you but there are also risks to consider. Here are some pointers as to what to do:
Binary options – how they work
The most common types of binary options are the high-low ones, and they are time limited, so there is a fixed expiry date and time. It’s a good plan to watch the markets for a while before you make a decision as to whether you think a price is likely to rise or fall. A prediction of a rise is designated “a call” and a fall is called “a put”. You can decide on a strike price – this is often the current stock price – and then choose between a call or a put.
A call to rise
If you place a call, you believe the price will rise, and when the binary option has expired and you have estimated the market’s direction correctly, you will receive a fixed amount for the investment you placed. If you’ve called it wrongly and the market doesn’t behave in the way you have predicted, then that investment is lost.
A put to drop
This works the same way as placing a call, except in reverse. You invest in the belief that the strike price will have dropped when the binary option has expired, and if it has then you will get your fixed return. If the price is higher, you forfeit your investment.
When you’re new to anything, it’s good sense to take professional advice at the outset, especially when dealing with financial matters. You can find a good binary options website to help you understand the process in depth and to start to develop strategies that you are comfortable with. As you get more experienced – and remember, you will have losses as well as gains – you can develop your strategies to suit your growing knowledge of how markets work.
A few tips
- Take professional advice and information from a reputable broker before you start.
- Read up about how markets operate so you thoroughly understand the process, and use preparation time to study how markets fluctuate, especially in certain conditions.
- Don’t invest more than you can afford to lose.
- Start out with small investments to test things out before you invest larger amounts.
Binary options, when approached sensibly, can be a good way of giving you a financial advantage, while you decide exactly how much you want to invest.