Binary option: Difference between revisions

Revision as of 13:47, 11 February 2023

Revision as of 12:45, 28 February 2023

Line 4:

While binary options may be used in theoretical asset pricing, they are prone to [[fraud]] in their applications and hence banned by regulators in many jurisdictions as a form of [[gambling]].<ref name="Globes 12-15-16" /> Many binary option outlets have been exposed as fraudulent.<ref>{{Cite web |url=https://www.fbi.gov/news/stories/binary-options-fraud |title=Binary Options Fraud |website=Federal Bureau of Investigation |language=en-us |access-date=2017-05-30}}</ref> The U.S. [[Federal Bureau of Investigation|FBI]] is investigating binary option scams throughout the world, and the Israeli police have tied the industry to criminal syndicates.<ref name="FBI">{{cite news |last1=Weinglass |first1=Simona |authorlink=Simona Weinglass|title=FBI says it's investigating binary options fraud worldwide, invites victims to come forward |url=http://www.timesofisrael.com/fbi-says-its-investigating-binary-options-fraud-worldwide-invites-victims-to-come-forward/ |access-date=February 15, 2017 |work =[[The Times of Israel]] |date=February 15, 2017}}</ref><ref name="ToIidesofM"/><ref name=":1" /> The [[European Securities and Markets Authority]] (ESMA) have banned retail binary options trading.<ref name="esma.europa.eu">{{Cite web |url=https://www.esma.europa.eu/press-news/esma-news/esma-agrees-prohibit-binary-options-and-restrict-cfds-protect-retail-investors |title=ESMA agrees to prohibit binary options and restrict CFDs to protect retail investors |website=www.esma.europa.eu|access-date=2019-03-21}}</ref> [[Australian Securities & Investments Commission]] (ASIC) considers binary options as a "high-risk" and "unpredictable" investment option, <ref>{{Cite news |url=http://www.ibtimes.com.au/binary-options-trading-australia-how-safe-it-1568192 |title=Binary Options Trading In Australia: How Safe Is It? |date=2018-05-14 |work=International Business Times AU |access-date=2018-05-22 |language=en}}</ref> and finally also banned binary options sale to retail investors in 2021.<ref name="asic.gov.au">{{cite web |url=https://asic.gov.au/about-asic/news-centre/find-a-media-release/2021-releases/21-064mr-asic-bans-the-sale-of-binary-options-to-retail-clients|title=21-064MR ASIC bans the sale of binary options to retail clients |website=[[Australian Securities & Investments Commission]]|access-date=8 March 2022}}</ref>

Binary trading, also known as binary options trading, is a type of financial trading where the trader predicts whether the price of an asset will rise or fall within a predetermined time frame. The asset can be a commodity, currency, stock, or index.

In binary trading, the trader places a bet on whether the price of the asset will go up or down. If the trader's prediction is correct, they will receive a fixed payout, usually between 60% and 90% of the initial investment. However, if the trader's prediction is incorrect, they will lose the entire amount invested.

Binary trading has gained popularity in recent years due to its simplicity and accessibility. However, it is important to note that binary trading is a high-risk activity and can lead to significant losses if not done carefully. It is recommended to thoroughly research and understand the market and the asset being traded before making any investments. It is also important to choose a reputable binary options broker and to manage risk through diversification and proper money management techniques.

The FBI estimates that the scammers steal US$10 billion annually worldwide.<ref name="TimesofI3417">{{cite news |last1 =Weinglass |first1=Simona |title=As Israel-based financial fraud soars, police swoop on 20 suspects as part of global, FBI-led sting |url= http://www.timesofisrael.com/as-israel-based-financial-fraud-soars-police-swoop-on-20-suspects-as-part-of-global-fbi-led-sting/ |access-date=March 4, 2017 |work=The Times of Israel |date=March 4, 2017}}</ref> The use of the names of famous and respectable people such as [[Richard Branson]] to encourage people to buy fake "investments" is frequent and increasing.<ref name=branson>{{cite news |url= https://www.theguardian.com/business/2017/may/17/richard-branson-virgin-says-scammers-are-using-his-name-to-dupe-investors |title=Richard Branson says scammers are using his name to dupe investors |work =The Guardian |date=18 May 2017 |author=Press Association |access-date= 18 May 2017}}</ref> Articles published in ''[[The Times of Israel]]'' newspaper explain the fraud in detail, using the experience of former insiders such as a job-seeker recruited by a fake binary options broker, who was told to "leave [his] conscience at the door".<ref name="israeltimes1"/><ref name="israeltimes2"/> Following an investigation by ''The Times of Israel'', [[Cabinet of Israel|Israel's cabinet]] approved a ban on sale of binary options in June 2017,<ref>{{citation |title=Israel cabinet approves ban on sale of binary options |work =Reuters |author=Tova Cohen |date=June 18, 2017 |url=https://www.reuters.com/article/us-israel-binaryoptions-lawmaking-idUSKBN19906C |access-date=2017-07-15}}</ref> and a law banning the products was approved by the [[Knesset]] in October 2017.<ref name="AtLast">{{cite news |last1=Weinglass |first1=Simona |title=Israel bans binary options industry, finally closing vast, 10-year fraud |url=https://www.timesofisrael.com/israel-bans-entire-binary-options-industry-finally-closing-vast-10-year-fraud/ |access-date=October 24, 2017 |publisher=[[The Times of Israel]] |date=October 23, 2017}}</ref><ref name="Knesset ban 10-24-17">{{Cite news |url=https://www.haaretz.com/israel-news/business/1.818782 |title=Israel Bans Binary Options Industry That Defrauded Millions |last=Tomer |first=Uri |date=2017-10-24 |work=Haaretz |access-date=2017-10-24 |language=en}}</ref>