The Chicago Board Options Exchange or the CBOE is the world’s largest option exchange today. As its name suggests it is located in Chicago, Illinois. Established in 1972, the CBOE is the first options exchange in the US & offered standardized listed options mostly on stocks. Since July, 2008 CBOE has been offering binary options contracts for purchase as a way for traders & investors to profit from their sense of market direction of specific financial assets.
It was an instant hit & spread like wildfire all across the world. Taking a cue from CBOE binary options, over-the-counter binary options are now trading online by retail binary options traders. The binary options offered by CBOE is quite different from the ones offered by online brokers through their online web based platforms.
For instance, the payout structure of CBOE binary options is different from online retail binary options. In CBOE the payout is fixed at $100 & the price of the contract can vary from $1-$99 per contract. But if your prediction turns out to be incorrect then you would receive nothing & would also lose the amount invested in the binary option.
In contrast to it, many online binary option brokers offer insurance, protection or guaranteed returns at a rate of 10%-15% of unsuccessful binary option return. So even if you get your predictions wrong you will get 10-15% of your investment returned to you. But in CBOE binary options a trader will not get any such facility. It is either all or nothing.
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September 4, 2011 | by John Greener |