Securities and Funds: Beneficial Ownership
Binary options, also called all-or-nothing options, are simply options that either pay a fixed amount or nothing. If the option is in the money, the holder receives a fixed amount; if the option is not in the money, the holder receives nothing.
A binary option value that is close to being in the money is likely to be very volatile, especially close to expiration.
Securities and Funds: Beneficial Ownership
A binary option can also include features of other types of options. For example, there are binary barrier options
The beneficial owner of an asset is the person for whose benefit it is held. Beneficial ownership arises when an asset is owned by one person (the “rightful owner”) who is required to use it on behalf of another; one person holds assets as a trustee for another.
Securities, especially those held by private investors, are often held by nominee broker companies. Like other assets, securities can also be owned by trustees, and it is sometimes necessary to track ownership through a long chain of holding companies and trustees to find the ultimate beneficial owner.
Difficulties in tracing ultimate beneficial owners can make it difficult to comply with regulations, such as those related to takeovers. There are mechanisms in the UK to help uncover them. For example, the Companies Act gives companies the right to require legal owners (whose names are listed in the shareholder register) to disclose information about beneficial owners.
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