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Binary Options Strategy
If you trade binary options, you already know the great benefits of this type of trading offer. What I will try to show in this article is a very simple strategy that can be applied in certain situations and gives excellent results for those who trade using binary options.
The strategy I’m going to explain is based on hedging and tries to get high profits by only risking a small investment. This strategy can only be applied in certain situations but it will be very useful for any trader.
To better illustrate 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 $100 call option on NASDAQ with an expiration date of 12 hours. NASDAQ value was 2380 when you bought the option and 3 hours later it was 2430 (up 50 points). At this point you have to buy a PUT option on NASDAQ with the same amount and the same expiration date as the first option.
After buying another option you have two possible outcomes: if the NASDAQ price is between 2380 and 2430 at expiration, or you have one winning and one losing option, both options are winners if the expiration value is below or above 2380. 2430.
Now let’s analyze both possible outcomes, considering the NASDAQ option’s 80% profit rate and 10% loss of return. If both options are winners, you will have a total profit of $160, while if you have one winner and one loser, you will lose $10.
To resume the above, this binary options strategy ensures that you can lose a very small amount with a chance to win a lot. The only downside is that you can only use it in certain situations, when you already have a better option that was good to begin with.
There are many other possible strategies to use when trading binary options, but I like this one because it gives you the chance to win a lot with very little risk.
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