Binary betting

Binary betting is a type of financial betting which displays the price of a bet as an odds index from 0 to 100 where the bet settles at 100 if an event happens and 0 if it does not. The greater the likelihood of an event happening the higher this price will be. A price of 91-93, for example, suggests the betting broker which offers the bet believes the event has a 92% likelihood of happening. An event can be bought or sold, making it possible to profit both from the event occurring or not occurring. A bettor who thinks that the event will occur will buy the bet and a bettor who thinks the event won't occur will sell the bet. An event could be, for example, the "FTSE to close 11 points higher by midday", "the FTSE will end higher on the day", "Brent Oil will close between 50 and 60 cents lower" and so on.

Binary bet winnings and losses are calculated in the following manner:

When BUYING, Profit/Loss = The closing price minus the opening price times your bet size (per point)

When SELLING, Profit/Loss = The opening price minus the closing price times your bet size (per point)

Example One: The bet is that "the FTSE will close higher on the day". The price is 38-43. You BUY (agree with the proposition) at 43 for £5 per point. The FTSE does close higher on the day, meaning that the bet makes up at 100. Therefore your winnings are:

Example Two: The same bet, that "the FTSE will close higher on the day". The price is 38-43. You BUY (agree with the proposition) at 43 for £5 per point. The FTSE does NOT close higher on the day, meaning that the bet makes up at 0. Therefore your winnings - or losses in this case - are:

Example Three: The same bet, that "the FTSE will close higher on the day". The price is 38-43. You SELL (disagree with the proposition) at 38 for £5 per point. The FTSE does NOT close higher on the day, meaning that the bet makes up at 0. Therefore your winnings are:

A Floating Binary is the most common type of binary bet. It is a bet where the binary price moves but the strike price (the price the market needs to reach for the event to occur and therefore make up at either 100 or 0) is fixed.
For example, if the bet is "Brent Oil will end down on the day" the Buy and Sell prices will change throughout the course of the bet, but the proposition itself will remain the same.

A Fixed Binary is a bet where the binary price remains fixed but the strike price (the price the market needs to reach for the event to occur and therefore make up at 100) is moving.
For example, if the bet is that "GBP/USD will end up 25 points by the end of the betting period", and you can buy this at 95, the buy price would remain at 95 though the target price for the bet might change to GBP/USD being up 21 then 19 then 13 then 7 etc.

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Wikipedia