One touch and no touch binary options are options where the whole lifespan of the option is important. This distinguish them from the binary options where you only have to worry about where the underlying price will be upon maturity.
One touch binary options
With a one touch binary option, you will get paid if the underlying asset reaches the pre-specified price point at any time during the lifetime of the option.
With a standard binary option, what is important is where the asset price is exactly when the option reaches maturity. With a one-touch binary option, the whole lifespan of the option is important. This also means that you can know much quicker that you will get paid.
Example: You purchase a one-touch binary option with a lifespan of 5 hours. Within the second hour, the price of the underlying asset reaches the pre-specified price point. You now know that you will get paid, even though it has not been 5 hours since you bought the option.
Because of how markets tend to move, one touch binary options are usually created in a way that means that a rather large price movement will be required for them to pay. It is difficult to find a one touch binary option where the pre-specified price point is very close to the current market price when the option is sold.
No touch binary options
The no touch binary option can be described as the opposite of the touch binary option.
You buy a no touch binary option if you believe that the price of the underlying asset will never touch the pre-specified price point at any time during the lifetime of the option. If your prediction comes true, you get paid.
No-touch binary options is a popular choice for traders active on a stagnant market, where making money from price movements would be difficult.
A wide range of binary options broker offer touch and no touch binary options, but the selection of underlying assets tend to be smaller than for more traditional binary options.
With most brokers, touch and no touch binary options are found in the exotic options area of the trading platform.
Touch and no touch binary options are available for a wide range of underlying asset classes, including forex, cryptocurrency, shares, commodities, and indices.
One of the appeals of touch and no touch binary options is that they tend to come with big payouts when they do pay out. Typically, they are high-risk high-reward options. It means that, compared to standard binary options, they are less likely to pay out – but when they do pay out the pay big.
Before you get mesmerized by the big potential payout, make sure that this is an option where the potential payout is actually large enough to justify the high risk. Many brokers offer touch and no-touch options that are very unlikely to pay, and where the large payout simply is not big enough to justify the big risk taken by the trader.