Some Brokers Factors In Payout Calculations

Still on how to determine payouts in binary options, it is very important to take a look at some other factors investors might not be interested at during payout calculation. They are:

The Type of Asset Traded and Expiration Period
The type of underlying assets traded and the Expiration period are considered in payout calculation. For example a less volatile asset with longer expiration period usually has lower payout percentage attached to it. On the other hand, a high volatile asset, for example GBP/USD and a shorter time has a higher payout. 

Does this make sense?

The Commission of the Broker
The broker's "commission" must not be over looked in determining payout rate. If not for brokers, where in the world would you trade? They provided the platform for you to show what you get and for this reason, I don’t think it’s a bad idea to get some cent from you as compensation. The commission rate also varies among brokers, but since there are so many brokers out there, the rates should become increasingly competitive over time. Do your diligent research before selecting a broker of your choice.

You can also check binary option brokers review to know which one is best for you. In this website, we have done an unbiased review of good and reliable binary option brokers.
For example, check TopOption Review, you can also read through OptionsXo Review.

When an Option Trade is Close

As said before now, binary options are "all-or-nothing" kind of trading where you receive payout or loss only when a given contract expires. There are also few brokers that allow you to close a binary option trade before the expiration time and date. This normally depends on the type of option, and it's only available within a certain time frame. In most cases it’s usually available between 5 minutes after an option trade opens and 5 minutes before an option expires. In this case you are allowed to take responsibility to take profit or stop loss. 

But in this feature of closing trade at your discretion, the payout is lower. When trading with a broker that allows early closure of an option trade, the value of the option tends to move along with the value of the underlying asset. That is, you see the value of the purchased asset increasing or decreasing as price goes for or against you respectively. 
 
For example, with a "Call" (or "Up") option play as shown below, the value of the option contract increases as the market moves above the strike price. This implies that, the closing value of the option is greater than the premium paid, depending on how far it has moved passed the strike price, but it can never be greater than the agreed maximum payout.

On the other hand, if the underlying asset moved lower (out-of-the-money), the value of the option contract decreases and the option buyer would be returned with lesser payout than the premium paid if he/she decides to close the trade early. 

You must also be aware that the broker commission is also included in both scenarios for any option trade closed earlier. It is very nice to research properly about broker’s payout and commission before trading.