Binary Options – Touch Options

Besides the simple Binary Options, i.e. the call and put options, there are other types of trading that are offered by many brokers. Another type of trading, which is becoming increasingly popular not only with professional traders, are the so-called touch options. Translated from the English “touch” means to touch, which describes the core of this trading form very well. There are different variants in the area of touch options, between which the trader can choose.

See the example of a Touch Option:

The One-Touch Option as the most popular variant

The most known and probably currently also most frequently used variant of the Binary Touch Options are the one-touch options. Almost every broker now offers this form of Binary Options. There is a very significant difference between this type of trading and the classic call and put options. With the simple Binary Options, as is well known, the trader only has to estimate one direction in which the underlying asset of the option has moved on the expiration date.

With the one-touch option, on the other hand, the client commits himself to a certain price being touched or reached. Another difference to the simple call or put option is that this price does not necessarily have to be touched at the end of the term, but it is sufficient if the price is reached at some point during the term of the option. This is where the term “one-touch” comes from because a single touch is enough for the trader to make a profit. If the price is reached, the option is immediately terminated.

The trader makes a loss if the fixed price has been reached once by the end of the term. The normal yield also moves between 70 and 90 percent in the area of one-touch options. However, there are some brokers who offer a so-called high-yield variant in which the yield can be up to 500 percent. The special feature of the high-yield variants is that the price to be achieved is relatively far from the current price of the underlying asset. The risk for the trader is therefore quite high.

Recommended brokers to trade Touch Options:




Start trading: 

IQ Option logo

+ Yield up to 100%
+ Best platform
+ 24/7 support

Deriv logo

+ Yield up to 95%
+ Auto trading (bot)
+ MetaTrader 5

Pocket Option logo

+ Yield up to 92%
+ Bonus program
+ Accept any clients

No-Touch Options

A second variant of the touch options has quasi the opposite intention as the One-Touch option and is called the No-Touch option. With the No-Touch Option, the trader does not speculate that the underlying of the binary option will touch a certain price during the term of the option, but that a fixed price will not be reached. Such a binary option could, for example, involve the trader speculating that Deutsche Telekom’s share price will not reach the EUR 11.50 mark by the end of the week. If, for example, the current price is 10.90 Euros and does not even reach at least 11.50 Euros by the option’s maturity, the trader has “won”. On the other hand, if the price is only touched once during the term, the stake is lost.

Double-Touch Options

A still quite new and still rarely offered a variant of the touch options are the double touch options. These binary options are also available in two variants, namely as double-one touch and double-no-touch options. The striking difference to the “normal” touch options is that there is not only a price to be reached, but the price of the underlying asset must touch two fixed points. In order for the trader to make a profit, both prices must be reached at least once within the term of the option. In most cases, one price to be reached is above the current price, while the other price to be reached is below the current price. For example, if Deutsche Telekom shares are currently quoted at EUR 11.20, a double-touch option could mean that the price must reach EUR 11.50 on the one hand and EUR 10.50 on the other by the end of the term.

Conclusion: Touch Options are suitable for Market News

As we showed you in our Binary Options Volatility Strategy, Touch Options are a good way to trade market news. The key to success is to open the Touch Option before the market news. When the high volatility comes into the market you got the chance to hit the target or not.

See my other posts about Binary Options:

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