Types of CFDs, FOREX Options
CFDs, FOREX options are a simple and effective trading too and although a majority of CFDs, FOREX options traded are of one kind of options, there are in fact several models of CFDs, FOREX options.
There are five main models of CFDs, FOREX options not including a variety of obscure CFDs, FOREX options that are rarely traded. The five main CFDs, FOREX option models include: 'cash or nothing', 'asset or nothing', 'one touch', 'no-touch', and 'double one touch'/'double no touch'.
The most commonly traded CFDs, FOREX options are the 'cash or nothing' but the others can be found in some markets and platforms. Below is a brief explanation of each CFDs, FOREX option model:
Cash or Nothing CFDs, FOREX Options
The most commonly traded CFDs, FOREX option due to its simplicity and effectiveness as an easy to monitor trading tool. This model sets out a strike/expiry price for an asset. The trader then buys a contract for either 'Call' or 'Put', depending on their estimate of the asset contract expiring above or below the strike price. If the trader is correct they will earn a fixed return of ___% up to ____ % and if the trader was incorrect they would lose their stake. (but receive a ___% rebate/cashback.)
Asset or Nothing CFDs, FOREX Options
Similar to 'cash or nothing' CFDs, FOREX options with one distinctive difference; the payout is determined by the price the asset has reached rather than being a fixed and predetermined price.
One-touch CFDs, FOREX Options
A predetermined price level is set for the asset and the contract expires only when the asset reaches that price. All the trader has to do is decide whether the price of the asset will ever reach the predetermined price within the lifetime of the contract and not whether the contract will expire at that price.
No-touch CFDs, FOREX Options
The opposite of one-touch. Here the trader gets a payout if the contract expires without reaching the predetermined price level.
Double-one-touch or Double no-touch CFDs, FOREX Options
The same as one-touch and no-touch CFDs, FOREX options, except that here there are two predetermined price levels so in the case of double-one-touch the price of the asset much reach both price levels during the lifetime of the contract and in double-no-touch the asset price must avoid reaching both price levels.