Binary FX Option
The Binary FX Option is a derivative financial instrument which, when a barrier is reached or not reached, provides a fixed amount for the option buyer.
The barrier can be of two types, depending on when the right to receive a certain amount arises for the buyer of the option at its maturity. If during the life of the option, the barrier or one of the two barriers set:
Is reached
- Binary FX Option with one touch barrier
- Binary FX Option with two one touch barrier
Is not reached
- Binary FX Option with no touch barrier
- Binary FX Option with two no touch barrier
The value of the premium of Binary FX Options depends on the following factors:
Spot rate of the FX pair of the option: The biggest influence on the value of the option is the spot rate of the FX pair and the volatility of the exchange rate.
Type and level of barrier(s) (one touch, no touch): The clients of the bank can also make profit if by the maturity of the option one touch barrier is reached or no-touch barrier is not reached.
Interest rates on each of the currencies in the FX pair: In cases when the client wants to make a profit, he/she can buy an option at a certain premium (price) and sell it back at a higher premium.
The volatility of the FX pair exchange rate: Based on their expectations about the FX rate and the volatility, the clients of the bank can use Binary FX Options to realize income from trading them.
The time to the maturity of the option: Ability for the customer to fix a maximum amount of negative result when buying Binary FX Options, i.e. to lose the entire invested amount.
Target market of the product
„Binary FX Options“ is a financial instrument, which the Bank manufactures and distributes as a product. As of 2 July 2018, the European Securities and Markets Authority (ESMA) introduced a prohibition on the marketing, distribution or sale of binary options to retail investors. The table below sets out the criteria for determining for which client profile the product is compatible with or not.
Contact dealers:
Treasury Sales Department
Deyan Mankovski – Head of the Treasury Sales Department– 02 80 10 862
Kalina Mays – Head of FX Department, Treasury Sales Department – 02 97 66 233
Milena Lukanova – Senior Dealer, Treasury Sales Department – 02 97 66 232
Hristo Arnaudov – Dealer, Treasury Sales Department – 02 93 91 364
Velichko Dimov – Dealer, Treasury Sales Directorate Department – 02 93 91 126
Stoyan Georgiev – Senior Dealer, Treasury Sales Department – 02 93 91 130
Hristo Sugarev – Dealer, Treasury Sales Department – 02 93 91 133
Ivelin Ivanov – Senior Dealer, Treasury Sales Department – 02 93 91 365
Martin Georgiev – Dealer, Treasury Sales Department – 02 97 66 234
Documents
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Key Information Document - Binary Option
PDF file
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Product Description - Binary Option
PDF file
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Information about Binary FX option costs
PDF file
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