Single Payment Options Trading

What Is Single Payment Options Trading?

Single payment options trading (SPOT) is a type of option that permits investors to determine that certain conditions be met to receive a payout, and furthermore offers them the chance to set the size of the payout assuming said conditions are met.

Understanding Single Payment Options Trading

The broker giving single payment options trading products will decide the probability that the conditions will be met and charge commissions likewise. With SPOT transactions, the outcome is limited to just two scenarios:

1. Conditions set by the two players happen as expected and the investor collects the settled upon payout.
2. The event doesn't happen as anticipated and the investor loses the full premium paid to the broker.

In view of these attributes, SPOT transactions are frequently alluded to as binary options and are normally associated with the foreign exchange market.

Consider for instance a trader who trusts the EUR/USD won't break below 1.20 in 14 days or less. In a SPOT transaction, they could pay a certain premium to a broker and afterward collect the settled upon payout in 14 days on the off chance that this scenario ends up being accurate. Notwithstanding, if the EUR/USD really does truth be told break below 1.20 inside that time, the investor would lose the full amount of the premium.

The true benefit of SPOTs is the relative straightforwardness and simplicity for investors. To work with SPOT transactions, an investor just has to imagine scenarios for any currency pair. Then again, SPOT options can be scary for first-time SPOT investors, in light of the fact that the boundless number of predictive scenarios can feel overwhelming. Luckily, there are ways of improving on the selection interaction.

For instance, the "one-touch spot" option will yield a payout just on the off chance that the exchange rate arrives at a certain level before the expiration date. Notwithstanding, the payout is limited, and it is resolved both by the duration of the option and the difference between the one-touch amount and the current exchange rate at the time of purchase.

On the other hand, investors may likewise draw in a "no-touch spot" option, in which they will receive a payout on the off chance that the exchange rate on a currency pair doesn't arrive at a certain level before expiration.

While numerous investors new to forex spot options first consider going all in with the standard one-touch and no-touch options, it's generally not long before they become alright with composing their own options with various self-chose scenarios.

Features

• In a SPOT transaction, a trader chooses a predictive scenario, like the EUR/USD not breaking below 1.20 in 14 days or less.
• In the event that the scenario happens, the trader collects a payout else the investor loses the premium paid to the broker.
• Single payment options trading (SPOT) permits an investor to set the conditions to be met to receive a payout, as well as the size of the payout.
• SPOT transactions are ordinarily found in forex markets.