Are Binary Options legal or not The Deffinitive Answer

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Should you be new to the world of Binary Options trading then you may be asking yourself if trading them is legal, and we are happy to report that trading any type of Binary Options online is perfectly legal!

There are many different online and mobile Binary Options trading sites that you can instantly become a member of, however we would strongly suggest you stick to those sites listed upon our website as they are all fully licensed and regulated and always adhere to the highest codes of ethics and standards.

Below we have put together some of the most commonly asked questions regarding the legality of Binary Options trading sites and brokers, and as such these will answer any questions you may have, and will also give you an idea of what qualities you should be looking for and demanding from any Binary Options trading sites you are thinking of becoming a customer of!

Are there any Age Restrictions for Trading Binary Options?

You will find that you have to be a minimum age to trade Binary Options online, much like when you buy any type of financial product or join up to any online gambling site, the operators and licensing jurisdictions of those sites require you are a certain age to start trading Binary Options online. This will vary from country to country but usually you have to be at least the age of 18 to start trading Binary Options online.

Which Licensing Authority Govern Binary Options Sites?

Each different country of the world will have their own unique regulatory body that governs, licensed and regulates online Binary Options trading sites, and below we have listed each regulatory body. Please ensure that when you join up to any Binary Options trading site the site is approved and has been registered by one of these governing bodies:

  • Austria – The governing body for all Binary Options trading sites offering services to Austria based traders is the Finanzmarkt Österreich (FMA).
  • Belgium – The governing body for all Binary Options trading sites offering services to Belgium based traders is the Financial Services and Markets Authority (FSMA).
  • Bulgaria – The governing body for all Binary Options trading sites offering services to Bulgaria based traders is the Financial Supervision Commission (FSC).
  • Cyprus – The governing body for all Binary Options trading sites offering services to Cyprus based traders is the Cyprus Securities and Exchange Commission (CySEC).
  • Czech Republic – The governing body for all Binary Options trading sites offering services to Czech Republic based traders is the Česká Národní Banka (CNB).
  • Denmark – The governing body for all Binary Options trading sites offering services to Denmark based traders is the Finanstilsynet (The Danish FSA).
  • Estonia – The governing body for all Binary Options trading sites offering services to Estonia based traders is the Finantsinspektsioon (The Estonian FSA).
  • Finland – The governing body for all Binary Options trading sites offering services to Finland based traders is the Finanssivalvonta – Financial Supervisory Authority (FIN-FSA).
  • France – The governing body for all Binary Options trading sites offering services to France based traders is the Autorité des Marchés Financiers (AMF).
  • Germany – The governing body for all Binary Options trading sites offering services to Germany based traders is the Bundesanstalt fur Finanzdienstleistungsaufsicht (BaFin).
  • Greece – The governing body for all Binary Options trading sites offering services to Greece based traders is the Hellenic Capital Market Commission (HCMC).
  • Hungary – The governing body for all Binary Options trading sites offering services to Hungary based traders is the Pénzügyi Szervezetek Állami Felügyelete (PSZÁF).
  • Iceland – The governing body for all Binary Options trading sites offering services to Iceland based traders is the Fjármálaeftirlitið – Financial Supervisory Authority (FME).
  • Italy – The governing body for all Binary Options trading sites offering services to Italy based traders is the Commissione Nazionale per le Società e la Borsa (CONSOB).
  • Ireland – The governing body for all Binary Options trading sites offering services to Ireland based traders is the Central Bank of Ireland (Banc Ceannais na hÉireann).
  • Latvia – The governing body for all Binary Options trading sites offering services to Latvia based traders is the Finanšu Un Kapitāla Tirgus Komisija (FKTK).
  • Liechtenstein – The governing body for all Binary Options trading sites offering services to Liechtenstein based traders is the Financial Market Authority Liechtenstein – Finanzmarktaufsicht (FMA- LI).
  • Lithuania – The governing body for all Binary Options trading sites offering services to Lithuania based traders is the Lietuvos Respublikos Vertybiniu Popieriu Komisija.
  • Luxembourg – The governing body for all Binary Options trading sites offering services to Luxembourg based traders is the Commission de Surveillance du Secteur Financier (CSSF).
  • Malta – The governing body for all Binary Options trading sites offering services to Malta based traders is the Malta Financial Services Authority (MFSA).
  • Netherlands – The governing body for all Binary Options trading sites offering services to Netherlands based traders is the De Autoriteit Financiële Markten (AFM).
  • Norway – The governing body for all Binary Options trading sites offering services to Norway based traders is the Finanstilsynet – The Financial Supervisory Authority of Norway.
  • Poland – The governing body for all Binary Options trading sites offering services to Poland based traders is the Komisja Nadzoru Finansowego – Polish Financial Supervision Authority (KNF).
  • Portugal – The governing body for all Binary Options trading sites offering services to Portugal based traders is the Comissâo do Mercado de Valores Mobiliários (CMVM).
  • Romania – The governing body for all Binary Options trading sites offering services to Romania based traders is the Romanian National Securities Commission (CNVMR).
  • Slovakia – The governing body for all Binary Options trading sites offering services to Slovakia based traders is the Národná Banka Slovenska (NBS).
  • Slovenia – The governing body for all Binary Options trading sites offering services to Slovenia based traders is the Agencija za trg Vrednostnih Papirjev (ATVP).
  • Spain – The governing body for all Binary Options trading sites offering services to Spain based traders is the Comisión Nacional del Mercado de Valores (CNMV).
  • Sweden – The governing body for all Binary Options trading sites offering services to Sweden based traders is the Finansinspektionen (FI).
  • United Kingdom – The governing body for all Binary Options trading sites offering services to United Kingdom based traders is the Financial Conduct Authority (FCA).

A Guide to Trading Binary Options in the U.S.

Binary options are financial options that come with one of two payoff options: a fixed amount or nothing at all. That’s why they’re called binary options—because there is no other settlement possible. The premise behind a binary option is a simple yes or no proposition: Will an underlying asset be above a certain price at a certain time?

Traders place trades based on whether they believe the answer is yes or no, making it one of the simplest financial assets to trade. This simplicity has resulted in broad appeal among traders and newcomers to the financial markets. As simple as it may seem, traders should fully understand how binary options work, what markets and time frames they can trade with binary options, advantages, and disadvantages of these products, and which companies are legally authorized to provide binary options to U.S. residents.

Binary options traded outside the U.S. are typically structured differently than binaries available on U.S. exchanges. When considering speculating or hedging, binary options are an alternative—but only if the trader fully understands the two potential outcomes of these exotic options.

Now that you know some of the basics, read on to find out more about binary options, how they operate, and how you can trade them in the United States.

U.S. Binary Options Explained

Binary options provide a way to trade markets with capped risk and capped profit potential, based on a yes or no proposition.

Let’s take the following question as an example: Will the price of gold be above $1,250 at 1:30 p.m. today?

If you believe it will be, you buy the binary option. If you think gold will be below $1,250 at 1:30 p.m., then you sell this binary option. The price of a binary option is always between $0 and $100, and just like other financial markets, there is a bid and ask price.

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The above binary may be trading at $42.50 (bid) and $44.50 (offer) at 1 p.m. If you buy the binary option right then, you will pay $44.50. If you decide to sell right then, you’ll sell at $42.50.

Let’s assume you decide to buy at $44.50. If at 1:30 p.m. the price of gold is above $1,250, your option expires and it becomes worth $100. You make a profit of $100—$44.50 = $55.50 (minus fees). This is called being in the money. But if the price of gold is below $1,250 at 1:30 p.m., the option expires at $0. Therefore you lose the $44.50 invested. This called out of the money.

The bid and offer fluctuate until the option expires. You can close your position at any time before expiry to lock in a profit or a reduce a loss, compared to letting it expire out of the money.

A Zero-Sum Game

Eventually, every option settles at $100 or $0—$100 if the binary option proposition is true and $0 if it turns out to be false. Thus, each binary option has a total value potential of $100, and it is a zero-sum game—what you make, someone else loses, and what you lose, someone else makes.

Each trader must put up the capital for their side of the trade. In the examples above, you purchased an option at $44.50, and someone sold you that option. Your maximum risk is $44.50 if the option settles at $0, and so the trade costs you $44.50. The person who sold to you has a maximum risk of $55.50 if the option settles at $100—$100 – $44.50 = $55.50.

A trader may purchase multiple contracts if desired. Here’s another example:

  • NASDAQ US Tech 100 index > $3,784 (11 a.m.).

The current bid and offer are $74.00 and $80.00, respectively. If you think the index will be above $3,784 at 11 a.m., you buy the binary option at $80, or place a bid at a lower price and hope someone sells to you at that price. If you think the index will be below $3,784 at that time, you sell at $74.00, or place an offer above that price and hope someone buys it from you.

You decide to sell at $74.00, believing the index is going to fall below $3,784 (called the strike price) by 11 a.m. And if you really like the trade, you can sell (or buy) multiple contracts.

Figure 1 shows a trade to sell five contracts (size) at $74.00. The Nadex platform automatically calculates your maximum loss and gain when you create an order, called a ticket.

Nadex Trade Ticket with Max Profit and Max Loss (Figure 1)

Recently we have witnessed a much more stable binary marketplace in the US compared to several years ago with an increasing number of binary options. All of this was only inevitable after leaving the wild-west phase behind us, which was largely the period between 2020 and 2020. But, that phase left a lot of confusion and concern among traders about the legality and regulation of binary trading. Potential binary option customers ask whether it is legit and legal and whether the authorities will come after you if you start trading.

This is the hottest issue among traders in the USA at the moment, a country that has ever-changing laws and regulations. Before we get into specifics, we want to inform you first that it’s not illegal to trade binary options. It’s very much legal and regulated. The problem is that most US brokers are not legal and do not hold valid licenses. This makes the selection of legal US brokers a small one, but with enough quality.

List of Binary Option Brokers accepting traders from the USA:

You as a US citizen can also trade binary options with the help of brokers located outside of the US. But, that can be a bigger challenge because not all of them accept US traders. If you live anywhere in the rest of the world, you will not experience troubles in getting to trade binary options with any broker. As a US trader, you would.

However, you should always keep in mind that trading with a non-regulated broker is a bad choice. And although regulation does not automatically earn the broker quality, it offers security to the trader. Quality comes with the good customer service, fast payouts, fair trades and quality service all of which makes for a well-earned reputation. Therefore, always look for reputable and regulated brokers.

Frequently Asked Questions

In the following you will find ten of the most frequently asked questions asked by US citizens interested in legal US binary options. By providing answers to them, we will try to offer clarification on the subject.

If you ever thought that binary options are scam, rest assured that they are not (although you should be careful where you trade). There are potential scams, but after this you will feel more educated regarding legal binary options.

Which binary options providers should be avoided?

What to consider when looking for non-US binary options providers?

Is it illegal to trade with offshore binary brokers?

Can I try trading binary options for free?

Is there a minimum deposit policy?

What happens to licensed binary brokers that break the rules?

Can we expect a larger number of binary option operators in the US in the future?

What do I need to open a binary options trader account?

How binary options brokers make profit?

Choosing the right broker can be a critical step if you want to make some money through binary options. Various factors are to be considered. Here are some of the most essential tips when choosing the best binary option brokers.

Reputation

Carefully read opinions and reviews from other traders. A broker’s reputation says about the quality he offers. Go through all of the fine details about that broker and study the entire website including the T&Cs and FAQ. See if he is certified with a regulatory agency.

Features

See what tools are available and if they enhance value; choose a broker that offers demo account; see if there are bonuses and promotions offered to customers in order to spread your trading risks more effectively; check out if the payout options suit you.

Customer Service

Good and reputable customer service is essential because that way you get issues handled professionally and instantly. You will encounter a problem at least once in your trading career, and having a professional support agent at disposal makes things easier and less frustrating.

Binary options are very simple, extremely popular and most important legal in the US. You are asked a simple yes or no question whether a market will be above a certain price at this time. If yes, you buy the option. If no, you sell. It’s a powerful way of making money provided you are good at predicting prices.

Despite the popularity, binary options are somewhat undiscovered territory that yet has to be discovered in full. As this market grows and matures so will the laws and regulations in the US. One of the biggest problems at the moment is the selection of high-quality US binary options brokers, which is very small compared to Europe for example.

But, look how far we have come. Some years ago binary options trading was done largely as an over the counter transaction. The reason behind this was the lack of regulations. Today, binary options are as legal as other markets with the prospect of improved regulations to allow a bigger variety of brokers.

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