Binary options
A binary option is a security that pays a fixed reward or nothing depending on the result of the bet at expiry. This is basically a trade where the outcome is either “Yes” or “No”; that is where “binary” comes from. Binary options tend to involve short expiries, i.e., time periods up to 30 minutes. Note that they are closer to gambling than to trading and can quickly become an addiction. Having said that, I think binary options can make trading a bit more exciting and fun!
An example will make it clear. Let’s say a trader believes that Microsoft shares (MSFT) will trade above $315 at the expiry of the next 30 minutes. He decides to risk $100 on this bet. If after 30 minutes MSFT share price is higher than $315, then the trader will receive his initial $100, and the payout agreed which can be as high as 70%. If the stock price is lower $315 at the expiry, then our hypothetical trader will lose his initial investment entirely. So, in the binary option trade both maximum gain and maximum loss are known in advance; you cannot lose more than your investment, and you cannot win more than the fixed payout amount.
CoChilli
CoChilli enables binary option trading on digital assets. Built on the Base blockchain, the protocol allows you to make bets on BTC price over multiple timeframes which can be 1 minute, 2 minutes, 3 minutes, 5 minutes, or 10 minutes. Once you have selected the timeframe and the bet amount you risk, you make a bet – up or down. If your prediction proves to be correct, you’ll get 170% of the bet amount. Your winning comes from the liquidity pool. If you lose, you lose the entire amount of which 90% is distributed to the liquidity pool, and the remaining 10% goes to staking. Users can only trade BTC price at the time of this writing, but ETH/USD and ETH/BTC pairs will be available soon.
