The B.C. Securities Commission is warning investors in B.C. to use "extreme caution" when investing in binary options offered through an Internet-based platform called RBOptions.
RBOptions is "an unregistered online trading platform claiming to operate out of Toronto," the BCSC states in a press release.
Binary options have been likened to playing online poker. Investors essentially bet on stocks, commodities, currencies and interest rates going up or down, with all-or-nothing payoffs.
In a typical investment, an investor might bet that a company's stock will hit $100 per share at a certain maturity date. If the bet is correct, the investor earns $1,000; if he's wrong, he gets nothing.
"The returns on these products are dependent on whether the asset underlying the binary option rises above or falls below a certain amount," the BCSC explains.
Some binary options are listed on exchanges, but the BCSC warns that it is "concerned that a large portion of binary options are illegally traded through unregistered and unregulated online trading platforms.
"The BCSC urges British Columbians to exercise caution when dealing with firms that are not registered to trade or advise in B.C., as it greatly lessens investors' ability to recover their money."
