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Binary options are banned for retail investors. Offers to trade binary options may be a scam.
How binary options work
A binary option is a bet on the outcome of an event. For example, you could bet on whether the share price of a company will be trading above its current price in one hour. If you are right, you get a fixed payment. If you are wrong, you lose your money.
ASIC has banned the issue and distribution of binary options to retail clients. Read ASIC's media release.
Binary options are also known as 'all-or-nothing options', 'fixed return options' or 'digital options'. They allow you to make bets on share prices, foreign exchange movements, markets or economic events.
Contract times for binary options are usually very short. They range from a few minutes or hours, to a few months in the future.
Some prediction markets involve event-based contracts that share characteristics with binary options
Why binary options are banned
An ASIC review found binary options are a harmful, high-risk financial product. In the 13 months before the ban:
- 74-77% of active retail binary option investors lost money
- retail client accounts made net losses of $14 million in aggregate
- loss-making retail client accounts made net losses totalling $15.7 million, while profit-making retail client accounts only made net profits of $1.7 million.
Binary options are banned for retail clients. Some binary options providers may try to classify you as a wholesale client so you can trade binary options.
Wholesale clients do not have the same consumer protections as retail clients.
Do not agree to be treated as a wholesale client just to access binary options.
Binary options scams
There are scammers who use binary options to steal your money.
Be cautious if you receive a phone call or see an ad online or through social media offering binary options trading.
If you invest through an unlicensed overseas company and something goes wrong, you won't be able to get help.
See our tips on avoiding investment scams.
To help protect your money, follow our stop, check and protect tips and read about other investment warnings to be aware of.
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