Easy Options Trading - The Binary Option

1
Investor Notice on Option Trading
The basic concept of trades of this kind are
this the trader decides whether a well-known
stock, commodity, or other highly liquid asset
will rise or fall before the end of the day. A
small investment is then made (anywhere from 10
to 3000 for example) whereby the investor puts a
fixed dollar amount down and buys a call if he or
she thinks the asset will rise in price or buys a
put if the belief is the asset will fall in
price. Profits are calculated based on a
pre-determined fixed yield and paid out if the
trader has guessed correctly on the direction of
the price movement. The trader doesn't care how
much the price moves, only which direction. The
investment return is not obscured by complexity
such as the number of shares or some sort of
fractional computation.
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Understand the underlying asset in which you are
purchasing an option. Be familiar with where it
trades and anything else likely to influence it.
If it's a stock then will the company be making a
financial announcement soon? If it's an index
then look at any political factors which may have
a bearing on the country's currency.Realize that
the higher the rate of return of a binary option,
the more risk there is involved. The risk must be
weighed up against the reward before taking a
position on an option.Here are several industry
strategies for binary options trading. Each
investor should choose the one which suits him
best.The Reversal Strategy involves waiting for
the market to make a sudden move in one direction
on the assumption that it will not remain at the
extreme value permanently.
3
Another strategy is to closely monitor
commodities which will have a knock-on effect
from each other. For example, changes in stocks
will have an effect on the index in which the
stock trades. Or a large change in the price of a
commodity may affect the price of its country's
currency. It's useful to monitor changes in one
underlying asset and then to purchase an option
on the 'secondary' asset which it affects.The
Straddle is a common strategy used by investors.
This involves purchasing a Call Option when an
asset's price is low. As the asset's price
increases, purchase a Put Option. If the expiry
level settles in between these two strike prices
then both of an investor's options will be
in-the-money. This strategy necessitates close
monitoring of the asset to gauge when it appears
to be peaking in both directions.
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For example, a 200 Call option is bought on
EUR/USD, strike price of 1.46155 with an end of
the day expiry. If the asset is monitored
throughout the day and its price is increasing
but looks like it will peak, then a Put option
can be bought at say a strike price of 1.6895 for
200 with an end of the day expiry.If the EUR/USD
expires in NEO2 Review between 1.46155 and 1.6895
then the investor has succeeded twice. If the
return rate was 70 on both options then he could
make 680. There are different alternatives on
this strategy. The first option bought may have
an end of the week expiry.The asset can then be
monitored and a second option bought on the last
day of the week, with an end of the day expiry,
so that the two expiries coincide. This gives the
investor more time to review the asset's
movements and hence the possibilities. http//aut
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