Touch options are offered by some brokers as an alternative to standard binary options as a way to provide a wider variety of probability and payout options. While a regular binary option is a simple prediction on whether the asset will go up or down, a touch option is a prediction on whether or not an asset will reach a given price at any point before the expiry of the trade. There are several kinds of touch options available.
A one-touch option is the simplest version, and is just a prediction that an asset will reach a certain price level. For example, if the price of oil is $90 per barrel, you can place a trade that says that oil will hit $90.25, and if oil reaches that level at any point before the trade’s expiry, the trade is in the money. If the price of oil reaches $90.2499, and then goes down from that point until the expiry of the trade, then the trade is out of the money.
A double one-touch option is similar, but instead of predicting that the price of the asset will reach one level, the trader predicts that the asset will reach two different levels, one above and one below the current level. Starting with the oil example, making it a double one-touch option would just be adding an extra condition: that the price of oil will not only hit $90.25 at some point before the trade’s expiry, but that it will also hit $89.75 before the expiry of the trade.
There are also no-touch and double no-touch options. If you think of a one-touch option as sort of a call option, a no-touch option would be the equivalent of a put option: where a one-touch option predicts that an asset will reach some price level, a no-touch option predicts that it will not hit that level before expiry, and a double no-touch option works the same way with one point above and one point below.
Touch options are in some ways riskier than regular binary options because you are predicting a specific value and not just an up or down, but they are also less risky because the trade can be realized at any time before expiry, and not just based on the final value. Keep these two factors in mind and weigh your costs when going for touch options, and you will certainly see success.