History

Binary options trading is also popularly known as the digital options trading. It is a unique sort of options trade where in a agreement is brought out which has only 2 probable outcomes: the in-the-money outcome and the out-of-the-money outcome that is dependent on whether the price of the invested asset has increased or decreased as a whole during the time period of trading. The process is solely based on the predictions and assumption of the investors.

Binary options trading has existed since quiet a long time. But in past, options trading was consider uniquely as an (OTC) Over-The-Counter transaction, which had either very little or zero regulation. The Chicago Board Options Exchange (CBOE), was formed in 1973 by the Chicago Board of Trade that created a synchronized platform on which the options could be traded. It was one of its kinds in option trading and still is the largest exchange for options trade. Over the years, the number of transactions in options trading increased and therefore Options Clearing Corporation was formed so that sincerer buying and selling practices were adopted by the traders. Any failure in complying with the rules set by OCC resulted in banning of the trader, either temporarily or permanently.

It is an unusual instrument to create a transparent, simpler type of trade which required less guesswork. They were considered as a simpler form of over-the-counter instrument in its initial years. As a result, liquid market did not exist in reality. Also, no regulation whatsoever was there.

In the year 2007 the OCC proposed a change in rule in order to allow trading in major markets. In 2008, the rules were approved by the SEC and it made it legal for all the markets to list their binary options as trade-able. In the same year, American Stock Exchange was the first exchange that offered binary options publican. With advancement in technology, binary options trading have gained momentum and are now popularly used by traders and investors all over the world through major markets and the internet.

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