Binary Options Trading As an Investment Vehicle

1
Hedging Strategy Using Binary Options

• Binary options trading is an up and coming space
  right now with many Forex traders testing out the
  Binary options (B.O) waters. Why are we seeing so
  much crossover between Forex trading and B.O? The
  answer is quite simple. The two industries are
  very similar in a lot of ways. To name some of
  the areas that there is overlap, when B.O
  trading, you can actually trade Forex currencies.
  In addition, you are in essence predicting the
  movement of the asset based on the analysis of
  the Forex market. In addition, just like in Forex
  trading, Binary options requires a very small
  amount of initial capital and the option to
  profit is in both directions. If you predict that
  the asset will decline and it does, you make
  money and if you predict it will increase and it
  does, you also make money.

2

• Same as Forex trading. So if there is so much
  common ground between Forex trading and B.O
  trading, why are so many people leaving the
  former and going over to the latter? Well, the
  truth is that as attractive as Forex trading is
  to many people, B.O has some clear advantages.
  For starters, trading B.O is significantly
  simpler than trading Forex. You decide if you
  think the asset will go up or down and that is
  all. No charts, no analysis, no Fibonacci, and no
  retracements. In addition, profits in Binary
  options are immediate and transparent. Finally,
  all binary trading platforms are Web based
  meaning you can trade binary wherever you are as
  long as you have internet connectivity.

3

• Whether you choose to trade Forex or binary
  options, it is important to have some sort of a
  strategy, which includes your financial goals,
  your exit points, and an exact definition of how
  much money you are willing and able to risk. If
  you are trading binary options you already know
  of the big advantages this kind of trading
  offers. What I will try to show in this article
  is a very simple strategy that can be applied in
  certain situations and give great results for
  those who trade using binary options. The
  strategy I'm about to explain is based on hedging
  and tries to obtain high profits while risking
  only a small investment. The strategy can be
  applied only in certain circumstances but it will
  prove to be very useful for any trader.

4

• To best describe the strategy I will use an
  example from the very beginning and explain how
  to use the strategy on that particular example.
  Let's consider that you bought a CALL option on
  The Amissio Formula Review worth 100 dollars with
  the deadline after 12 hours. The NASDAQ value was
  2380 at the time you bought the option and after
  3 hours it raises to 2430 (a 50 points raise). In
  this moment you will have to buy a PUT option on
  worth the same amount and with the same deadline
  as the first option. After purchasing the second
  option you have two possible outcomes both
  options are winners if the price will be between
  2380 and 2430 at the expiry, or you have one
  winning and one losing option, if the expiry
  value is lower than 2380 or higher than 2430.
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