“Binary Options.” There, I’ve said it. Binary Options are the red-headed-step-child of the investing world and for good reason. While at heart, they are a viable means of market speculation, in practice, they are often nothing more than a smokescreen for scam artists. This is primarily because they, as a vehicle for speculation, came to life on the Internet in the gray areas between countries, jurisdictions, and regulatory bodies. What you need to know is that not all binary options are the same, not all brokers come from the same places, and that they are emerging as a gateway for new and wannabe investors.

The biggest problem with binary options today is regulation. When binary options first gained mass visibility about 8 years ago, there really was no regulation. The CFTC allowed for exchange-listed binaries at the CBOE and AMEX but few traders or brokers took advantage of them. Since then, myriad off-shore Internet-based brokers have arisen with a hodge-podge of international regulators, some real and some imagined. Needless this to say this arrangement has led to scams ranging from fake brokers to fake services and even fake regulators. One such scam that has come to light in recent years is that of NYStockOptions.com.

This brokerage is one of the biggest and most elaborate scams on the binary circuit today. It is so blatant I can’t believe the CFTC would allow it to continue to operate. Starting with the name, NYStockOptions, and their sister company, NYSOHedge, it wants you to think that it is located in New York and de facto regulated. It even goes so far as to list a New York office address; an office address that turns out to be nothing more than an Internet-based, virtual-office company providing 3rd party service to dozens, if not hundreds, of internationally based companies. The rankest part of this scam is that the scammers took it to the highest level. They claimed regulation by the Independent Financial Regulatory Authority, a completely bogus entity with a fake website and virtual office address at the same location as NYStockOption.com.

Not All Binary Options Are Scams

Believe it or not, not all binary options are scams. Not only has the US paved the way for an expanded binary-options-trading community, so too has the EU, Japan, Australia, New Zealand, and others. In the US, NADEX and Cantor Exchange are both operating under the umbrella of CFTC regulation and attracting new traders every day. In the EU, the Cyprus Securities and Exchange Commission (CySEC) has also taken up the challenge. It introduced regulation in 2012 that has since been expanded throughout the EU and friendly nations. Since that time the Japanese FSA and authorities in Australia and New Zealand have all undertaken regulation in their respective arenas.

The problem is that most of these regulatory arenas do not overlap and trading is a little different in each. In the US, binary options must be exchange listed, priced with set strikes and expiry, and buyers are matched with sellers. In the EU, most binary options are based on spot prices, have varying expiries, and are nothing more than a bet with house on the direction of the underlying instrument.

In Japan, binary options are a mixture of both. What this means is that traders in one country may not open accounts with brokers regulated in another, which can provide a real hurdle for those who simply want to trade. What’s left is the gray area, brokers who are operating from one of the off-shore banking havens such as Anguila in The Seychelles, Gibraltar, or the Virgin Islands.

Binary Options Are Here To Stay

No matter your opinion of binary options, they are here to stay. The industry has been making great advances and gaining mainstream acceptance, if not for the trading itself than for the profit potential of the brokerages. This is evident in a number of places. First, many forex brokers are either opening a binary brand of their own or adding binary options to their current platforms. Other signs include major advertising partnerships between well-respected brands and popular athletic franchises. One such example is the recent announcement that 24Option was partnered with Italian football team Juventus.

The development that most establishes the permanence of binary options is its emergence as an investment. I am not talking about trading stock, binary options are not investments, I’m talking about the recent IPO of the first binary-options broker. Rumors had been swirling for months that AnyOption would file for an IPO, but TechFinancials beat them to the punch. The white-label-platform providers and operator of 24Options made its successful public debut in early March, 2015. According to the company CEO, the money will be used to enhance current offerings, and to expand and grow the business.

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