Are binary options gambling only?

Are binary options gambling only? More and more customers and especially investors who like speculating have been showing interest in binary options. A recent survey reveals the surprising: survey participants were, among other things, asked whether or not they agree that trade with binary options is a kind of gambling. More than 60 percent of the participants actually considered speculating with binary options gambling or even put it on a level with betting.

Not only due to these survey results has the question arisen whether the investment in binary options is indeed gambling or other aspects can uplift this type of trading to a different level. That the question about gambling is not absurd at all in practice is confirmed by the fact that the taxation of generated profits still remains unclear. Although most experts assume that profits from trade with binary options should be charged with withholding tax, other specialists have the opinion that that these profits qualify as tax-free income from gambling. The character of binary options make the comparison with gambling and betting reasonable, as the investor decides for rising or falling of chosen rates. Based on this assumption, one could think that the winning chances are 50:50, as the rate either rises or falls. In reality, there are many counter arguments that classify binary options as a different type of investment.

Increase winning chances with strategies

The difference between binary options and the classical options is primarily the structure that is much simpler in binary options, since e.g. complex key figures are irrelevant. The structure of binary options itself is very similar to traditional options which allows us to transfer the trading strategies of “normal” options to binary options.

Traditional options as role model

In regard to the initial question it must be clarified whether traditional options can serve as role models for binary options. Classical options certainly fall under the category ‘securities’, not gambling. From this perspective it seems consistent that a binary option can also be considered a type of security. And there is yet another argument supporting this idea: In reality it is quite conceivable to enhance winning chances of binary options by over 70 or even 80 percent with appropriate strategies and sophisticated background knowledge. In a game of pure chance this is not at all practicable and winning chances are at most 50:50 – which is high even for gambling.

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