Binaries give you the potential for really dramatic returns on short-term market movements.
Buying the Australia 200 to finish up
It has been a quiet day and with 20 minutes to go to the end of trading the Australia 200 is down 24 points from the previous close. You think there is a chance the market will recover before the end of the session and end in positive territory, however.
Our price for the Australia 200 cash to finish up is 0 - 2.
You decide to buy 2 contracts at 2, the offer price. Each contract is worth $10 per point, so you are only risking $40.
The underlying index drifts up over the next 20 minutes, and just before the close is standing a few points down on the day. A few minutes later, after the closing auction, the official futures settlement is posted: up 3.2 from the previous settlement! Despite only ever risking $40 you have cleared nearly $2000 profit.
Profit
| Closing level | 100 |
| Opening level | 2 |
| Difference | 98 |
Profit = 98 x 2 contracts x $10 = $1960