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Read more Binary Options Options (finance) Options Trading Foreign Exchange Market What is the difference between options and binary options in trading. Generally, the premium is paid upfront by the option buyer to the option seller.
Thus, higher the price, higher the moneyness, greater the profit. Thus, higher the price, higher the moneyness, greater the loss. Thus the payoffs are as follows: Thus, in case of a vanilla call option the magnitude of buyers profit and the magnitude of sellers loss is dependent on moneyness of the option at expiry.