The One Touch binary option feature is also known as the Touch trading feature on some trading platforms. This feature allows for large payouts of up to 500% of the initial investment. Option is purchased during the weekend when the markets are closed. Strike price, investment amount and asset are predetermined. Once purchased if the asset reaches the strike price at any point during the upcoming trading week, trader is paid the agreed upon profit amount.
Asset: Facebook
Previous Close: $30.00
Strike Price: $35.50
Option Purchase Expiration: 06 h 49 min 24 sec
End Sale Time: 22:30 17/06/12
Option Expires: 20:10 22/06/12
Investment: 1 unit = $50 (Investor can choose multiple units of $50 each from the drop down menu)
Payout: $165
Return = 230% (Investment $50 x 230% = payout of $165)
In this example if the trader executes the Call before the expiration time he will have one week for Facebook shares to reach a price of $35.50. If at any point during this time period the stock touches the strike price the trader is paid the full payout amount ($165). If the stock does not touch the $35.50 strike price before the expiration time investor loses his investment ($50).
Several brokers have a Touch/No Touch feature which is a short term binary option. Trader can choose whether asset will touch a certain price in a given time frame or not touch a price.
The above screenshot from 24Option is an example of a Touch/No Touch option. Trader can choose whether asset will touch or not touch target price of 1.57024 before the expiration time of 10:45. In this case the trader invested $100 on a Touch option. If the asset trades at 1.57024 or higher before the expiration time, he will profit $72. If it does not trade at the target price before 10:45 he loses his investment.
For a detailed explanation of the different types of No Touch options click here.
