Binary options: Trading on the CAC 40 with binary options (Part 1)

binary-options-cac40-tradingBinary options’ trading requires the selection of an asset (raw materials, indexes, etc.) from a large inventory of financial products. Thus it can prove advantageous to trade on one of the major French indexes, such as the CAC 40. This article is the first in a series dedicated to this theme.

What is the CAC 40?

The CAC 40 takes its’ name from a former stockbroker company and is one of the primary international indexes – by far the most important on the Paris Stock Exchange.

This index is calculated from 40 stocks quoted in continuity and contains a selection of 100 companies, of which the Euronext exchange is the most important. The CAC 40 is a performance indicator of the French economy and the companies quoted represent the main areas of economic activity in France.

The list of quoted companies making up the CAC 40 isn’t a permanent one. It can change over time so that there is always a fair representation of the different sectors found in the French economy. If a company quoted in the CAC 40 experiences a significant price decline, one that is better performing will replace it.

How is the CAC 40 calculated?

The CAC 40 calculation takes into account the weighting of each company’s title value as quoted on the market. It is important to know that the companies don’t carry equal weighting in the calculation. If a company’s title value increases, the CAC 40 will also increase its’ weighting in relation to this value. In the second part we describe what method you can follow to speculate on the CAC 40 using binary options. Now you can also make your first deposit after reviewing our binary options broker comparison tool.

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