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Our Binary Options Trading Model

At IQ Option, our online trading business model is based on what is known as the pure exchange rule. It dictates that at any given moment and at any given price, there will be traders who are willing to buy and those who are willing to sell. Even though in one sense both parties are bound by price, on the other hand the price ultimately does not act as a barrier.

In an ideal world, the positions of both the buyers and the sellers would be equal, however in reality this is seldom the case.

IQ Options acts a broker, selling options directly to traders. The trader must predict whether an option will increase or decrease in value within a fixed time frame, and place their money accordingly. There predictions are called put and call options. If they predict the price will increase, this is known as a call option; a decrease in price is known as a put option.

With a little practice, it is not difficult to understand and learn binary options and you can open a free binary options demo account until you feel ready to make real trades.

Whichever trader makes the correct prediction will receive a predetermined rate of return on top of their original investment. After the trade has been made, the funds are then cleared inside our system and we take our commission of 7.5% directly out of the trading volume.

These trades are not happening in isolation; there will be multiple traders investing their money on each outcome. Sometimes there will be a difference between the amount of money being spent on call options and on put options. In cases where the amount due to be paid out exceeds the amount being put in, the difference is made up by a market-maker who covers the risk on our behalf. This risk is also known as exposure.

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