Binary Option Strategies Archive

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Choose The Expiration Of The Binary Option

By
Best Forex Brokers
– July 29, 2011Posted in: Binary Option Strategies

When trading binary options, one of the most important and especially the most decisive is undoubtedly the choice of the expiration of the option. It is therefore essential to understand the possibilities of life of the options and adjust your strategy and analysis according to expiry.

 

Most online binary options brokers offer their users the opportunity to choose themselves the expiration of their option. Called a binary option expiration date and time at which the option will be closed. So at this point that your speculation is true. It is obvious that this end will depend on the risk and your chances of winning.

 

These expiration dates may vary by dealer , but also by type of asset you are dealing with. As long as your option is not expired, so you have all your chances of winning. But the method of trading will be different depending on the length of your option.

 

A distinction is generally three types of binary options expirations we will present here and the methods to be applied to each of them:

 

The expiry of a binary option in the short term

The majority of binary options that are processed daily in the market are short-term options. This means more clearly than the expiration of these options takes a few minutes and a maximum one hour after the time of purchase.

 

To trade options in the short term, you can not use too broad indicators like current events, since the price changes in that time many are very tight. You must therefore rely on a technical analysis of graphs in real time. Although the binary options whose expiration is short term are very profitable, they are also riskier than othertypes of options and are therefore reserved for seasoned traders.

 

The expiry of a binary option in the medium term

Called binary option in the medium term the options expiration occurs several hours after subscription. This therefore calls for end to take into account several important factors. Of course we will study the graphs in real time, but also external events that may influence the course as an economic publication or the result of a political meeting, for example.

 

This is therefore to be able to combine technical analysis with the influential events.

 

The expiry of a binary option long term

Finally, binary options long term provide an expiration date to one or more days after the date of purchase. In this case, you do not need to dwell on the analysis of real-time graph that will take as a matter relevant to day trading. By cons, external events and the news is extremely important and must be analyzed in depth. Binary Options on the long term are less risky but they are also thus less profitable.

 

Choose the expiration of a binary option essentially asks to be able to recognize indicators specific to its service life. Rely on your experience and your knowledge.

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Winning With Binary Option Trading

By
Best Forex Brokers
– July 27, 2011Posted in: Binary Option Strategies

Winning the binary options is after all very easy. Indeed, the peculiarity of these options is that they allow a significant gain even if very slight movement in the price of the asset treated. As you can see, to save the binary options, it suffices to know how to anticipate the direction that will take a course, that is to say either upward or downward.

 

Do not invest all your money on one option

In addition to offering a good chance of winning, binary options can make money very quickly. There is no need to invest large sums on a single option. On the contrary, one of the things you can do is to multiply the options during the day instead of staking everything at once. Traders warned in fact use this technique that enables them to acquire large amounts in just a few hours.

 

Attention the timeout options

However, if this method has proven it can also be risky. Indeed, determining the direction that will take over a period shorter or longer is easy, but how this will evolve over the next few minutes is a bit more complicated. It is known that the general trends in the markets is the result of hundreds of micro-movements. Thus, even if a trend is clearly upward over one day, it can be shown several dips that have lasted a few minutes before going back up.

 

Technical indicators

So how to win at the binary options? To do this, you will first be able to use different key indicators. At first, take a few hours to analyze the different graphics made ​​available by the brokers . This way you can familiarize yourself with the reactions already registered in the past and will be better able to predict future movements in the price of the asset you are dealing with.

 

Economic news

But to really succeed in binary options, it is essential to monitor the economic and political news related to the asset you are dealing with. Indeed, courts often react strongly to external events. For example, if you trade commodities such as wheat , for example, natural disaster or drought announced by the media may be enough to lower prices. If you trade foreign exchange ( forex ), the announcement of the increase in the rate of one currency will undoubtedly climb over the face of competing currencies.

 

Conclusion

Ultimately, to win the binary options, it suffices to show attention and mostly logical.

 

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Bollinger Bands Binary Option Strategy

By
Best Forex Brokers
– July 27, 2011Posted in: Binary Option Strategies

The strategy of the Bollinger Bands can reveal signs of buying and selling of binary options. This method is widely used for its effectiveness primarily concernenant options above and below, but can also be applied to options one touch .

 

The purpose of this strategy

Specifically, this strategy shows us a return to the average price of a given asset. This information is valuable because it allows to anticipate important market movements. It is actually a statistical calculation that closely resembles the moving averages but more efficient.

 

Calculating moving averages

Indeed, to calculate the moving average is generally used a size of 2 standard deviations of 20 days. The strategy of the Bollinger Bands can then customize these moving averages based on the active treaty. So it uses all the standard deviations. But beware! Plus one standard deviation is less important and the detected signal is reliable.

 

Term of the option

For these signals to be effective, it should also define an appropriate time to binary options. For this, we use a time table that corresponds to several brokers with the use of a schedule at the time when the creation of the said options.

 

How the Strategy

On a graph showing the Bollinger Bands, so that when they say price drops below this band, it is the trader to set an option Above or call in anticipation of an increase in the market over a specific level. On the contrary, when the price goes above a Bollinger band, it is more advisable to place or put an option below.

 

As you will understand, so it is here to determine precisely the best time to put binary options.

 

But that’s not all. Thanks to the strategies of Bollinger bands and clues it provides, it is also possible to speculate on a decision of the lower prices with an option to miss. This occurs when the price bar touches a lower Bollinger band or a band of Bollinger high. In contrast, when the prices rise to a specific range can be placed an optional hit range. The question then place it on top of the market on a lower Bollinger band and below the market on a Bollinger band high.

 

Conclusion

However, we draw your attention to an important point. While the effectiveness of the strategy of Bollinger Bands is well demonstrated, it depends above all a good set of indicators. As with any strategy of binary options, it is advisable to test several times before investing large sums of money.

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Covering Positions Binary Options

By
Best Forex Brokers
– July 27, 2011Posted in: Binary Option Strategies

When you trade currencies on the Forex , Binary Options offer the opportunity to cover some of your positions.

 

Why cover their positions?

Covering positions is mainly used in binary options to hedge positions when the market may be volatile due to such a future economic or publication of a particular event whose outcome is uncertain. Continue reading “Covering Positions Binary Options” »

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Binary Options – Strategy On Market Conditions

By
Best Forex Brokers
– July 26, 2011Posted in: Binary Option Strategies

The most effective way to trade binary options is probably the strategy on market conditions. Indeed, to make the most of every opportunity to gain, it is essential to refer to these market conditions. To help you spot them, here are the three main characteristics of market conditions:

 

The market trend

Called “market trend” or “trending market” a market that represents a pronounced movement in a specific direction. We call the observed trend and “secular” when they appear for long periods and “secondary trends” on shorter periods. When this trend is bullish, the market called “bull market” and when it is down, it is called “bear market”. Graphics and tools for technical analysis to determine what type of market condition.

 

The crowded market

It is said that a market is bouncing or “Range Bound Market” when the price of an asset fluctuates between high and low in succession. This phenomenon is often observed following a market trend. Periods of market rebounding are indeed most often observed between two strong trends. Again, if the analytical techniques used to determine and anticipate the market rebounds, it is economic news that represents the best indicator of “no trend” that typically occur before the official publications, traders waiting for new elements to take a clear position one way or the other.

 

The volatile market

We talk about volatile market when the price of an asset moves significantly and rapidly in a given direction.These volatile market conditions provide an excellent opportunity for quick profits, especially with the use of binary options. It is generally observed that market volatility when market participants are hesitant about the future direction of the trend. To easily locate volatile markets, it is appropriate to use indicators like the VIX volatility gives us valuable information about current and past volatility of a given market. Over this index, the higher the volatility is high and conversely, the lower the more volatility is low.

 

Now that you know the different market conditions, you are able to implement your binary option strategy on market conditions. Indeed, the fact to identify trends and opportunities for significant movements in a market is a major advantage when trade binary options.

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Binary Options Collar Strategy

By
Best Forex Brokers
– July 26, 2011Posted in: Binary Option Strategies

The strategy called “Collar” has the primary goal of reducing the risk of loss on the purchase of a put option or call. It is indeed to buy a call option and selling a put option or vice versa to buy a put option and selling a call option.

 

The purpose of this strategy

The goal here is to offset the cost of the premium by the premium related to the sale of another option. Collar Free is called due to the fact that an investor manages to completely offset the premium of the option purchased.

 

A simple example

Suppose our investor buys a call option at $ 50 on a given asset whose exercise price is $ 45. The call option price is $ 2. If our investor sells a put option in conjunction with $ 40 which also has a cost of $ 2, it compensates for the premium of the call option. It is therefore in the case of a Collar Free.

 

Explanation of example

As you’ll understand when setting up a Collar strategy, one buys an option and simultaneously sells another option. If we refer to our previous example, and we imagine that the market ranges from 45 to $ 48, our investor loses the premium on the call option it has purchased and is also the option of bail could he sold.However, the benefit of this strategy is that here, if the market varies up to $ 55, the call option purchased by our investor $ 50 is then in money and have absolutely no cost to our investors . The benefit is more important.

 

Reduce the risk

Ultimately, if the strategy is rather reserved Collar investors familiar with the options market, it allows traders who use it to spend less money on premiums in order to obtain an overview of the market . But otherwise, this binary option strategy also reduces the risk implied volatility. Recall that the implied volatility is the phenomenon that influences the value of the underlying asset based on market expectations. Plus the implied volatility, the higher the option price will be. Applying a strategy Collar therefore avoids such overhead.

 

With a little practice, the strategy can be exploited Collar clear opportunities of the market without jeopardizing the benefits envisaged because of too high costs of purchased options.

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Binary Options Straddle Strategy

By
Best Forex Brokers
– July 26, 2011Posted in: Binary Option Strategies

Called the Straddle strategy to speculate on movements of significant market by buying a put option and call option at the same strike price.

 

Strategy in detail

Straddle strategy offers three possible benefits. The first is a strong movement of the market in a given direction and over a short period.

 

First opportunity to benefit

Suppose our investor buys a Straddle 82 cents on a given asset with an expiration date to a month. That means he buys a call option at 1.5 cents and a put option equal to 1.5 cents. In the event that the option price increases to 89 cents, so our investor will receive 7 cents premium. Deducting this amount the initial investment, you end up with a gain of 4 cents.

 

Another technique is to take advantage of a market moving upwards and downwards in succession from the exercise price.

 

Second possibility

Our investor still has its Straddle to 82 cents. If the market is changing the exercise price to 85 cents and then back down to 82 cents several times, the investor can make when the price reached 85 cents a Delta Hedging hoping that the market continues to grow up. In this case, the investor may only part of his premium. To do this, simply to become more about the call option and short the put option when the market rises and vice versa if it is declining. This technique therefore allows the investor to receive many times the gains of the delta that the situation presents itself during the term of the option.

 

Third possibility

The third possibility offered by the Straddle strategy on implied volatility that is used to determine the price of the option. If they change significantly over a short period, the opportunities for gain are interesting. While the implied volatility shows a significant increase in the price of the option is likely to mount him, too. Indeed, it is this volatility that is mainly used to set the value of an option. So there is a correlation between this volatility and changes in the price of the option concerned.

 

Conclusion

If control of the Straddle strategy requires some training it is an excellent method to minimize the risks involved in trading of binary options. Take the time to test it on some of your investments on a demo account.

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Binary Options Covered Call strategy

By
Best Forex Brokers
– July 26, 2011Posted in: Binary Option Strategies

Covered Call strategy is suitable for both beginners and traders to experienced traders. Its basic principle is to sell a “call” option in order to cover the risks of its investment portfolio or to increase the earnings of the portfolio.

Strategy in detail

To better understand this strategy of covered call, you should know that here the investor is the seller of the binary option. For this, it must have the underlying asset in its portfolio. Asset can be an index, a currency pair or an index or a commodity . In this case, the investor thus covers the risks exceeded the exercise price of the market.

Indeed, if the option is exercised at maturity, this allows the investor to receive the premium of the option and sell the underlying asset at the strike price.

A simple example

Assume that our investor has in its portfolio an underlying asset and sells a “call” option on that asset at the exercise price of $ 120. If the asset passes to $ 110, then it will receive a bonus of $ 2 or receive a full premium if the market for this asset does not move or only very slightly. This technique therefore allows the investor to pocket the premium while maintaining a long position in the underlying asset portfolio.

If also the underlying asset rises above the $ 120, our investor will be forced to abandon his position but it will sell its assets to $ 120 and receive the bonus in addition to $ 2.

When to use this strategy

If most of the time the Covered Call strategy is used on the equity markets, its main use to greatly reduce the risks but also to increase the return on investment.

We use this type of strategy for different purposes. First, the covered call allows the investor to receive income from the sale of the option “Call”, but also to receive greater benefits than the current market.

In the event of market decline, the covered call strategy can also greatly reduce the risks.

In general, the covered call strategy is used by the investor with a portfolio of varied and wishing to protect their potential losses by offsetting. But as we have seen, this strategy also provides greater gains while keeping open positions in the long term.

 

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Strategies For Binary Options

By
Best Forex Brokers
– July 26, 2011Posted in: Binary Option Strategies

Binary Option Strategies

Binary options are excellent trading tools that enable the development strategies of many diverse and varied and do not necessarily require to have a capital investment. But it is also important to adopt parallel strategies to control the maximum risk of loss. While trading in binary option allows using the principle of “all or nothing” to earn a lot, it can also in case of bad speculation us to lose a large part of our initial investment.

 

Test strategies

Before you implement any strategy for a major investment, it is essential to understand the different market trends. To achieve this, the ideal is to train using different strategies repeatedly,   to find the most effective method for your assets. This is the character in the short time of binary options contracts that allows this approach because it is easy to slightly modify our strategy of a trade to another without losing the thread of what’s happening in the market. This particular method makes it possible to become familiar with market conditions and gradually learn to make connections between events and trends.

 

Strategies tailored to binary options are easier to understand

The advantage when using “binary options” trade is the result of the investment can only lead to two choices.Either we win or we lose and there is no half measure. Thus, even inexperienced traders are better able to understand and develop strategies seemingly more complex than when trading in a more classic. We note in particular the strategy to cover their positions by opposite positions (Call Put cons). If this method is very difficult to implement in the context of a traditional trading, its operation is greatly simplified with the binary options trading. Ultimately, the effectiveness of strategies on basic binary options are critically dependent for management that will be the investor of its investment capital.

 

Risk management is enhanced for binary options

While the traditional trading allows most traders to master the risk of loss and volume limits for the binary options trading is the reverse. Here, the risks are known in advance and their control will depend mainly on the trader’s ability to cover its positions in an intelligent manner through the appropriate capital.

Another advantage of trading strategies on the binary options is that the stronger performance can easily and quickly cover the losses generated previously.

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