Choosing the best binary options strategy depends on a number of factors including fixed yield, direction of stock movement and a clear understanding of the underlying asset.
Many people who work with binary options are often unaware of the strategy of using a fixed yield binary option with hourly expiration. Once you are aware of this, you can safely ensure returns in the short term without any transaction costs associated with it.
In order to work out and adopt suitable strategies you first need to remember that binary options are trades at spot prices of stocks and there is no spread, call or put premiums involved. You can even trade with brokers free of commission. The yield for the holding period ranges between sixty five and seventy five per cent and this depends on securities. Also remember that expiration or holding period may be at the hour’s beginning or at the day’s end with just the best and most liquid securities being traded.
The best binary options strategy is also dependent on the fact that securities are sold and bought on the basis of dollar increments which are fixed and in a process much similar to mutual funds. So if you understand how mutual funds operate, working out your appropriate options strategy won’t be difficult either and also remember that they are non-marginable. Moreover, stock price size movement does not matter, it is the direction in which they are moving that will help you work out your appropriate binary options strategy.
Also when strategizing in terms of binary options, remember to exploit fixed dollar contacts and zero transaction costs advantages. An appropriate example is to use them as insurance for the short term against a short or long position taken in the long run. It is also important to fathom out the strength of the underlying asset on which you are buying the option. Keep track of its trading area and other associated factors that may influence it. If at all it’s a stock, then find out whether the company in question will make any financial announcements in the near future. While purchasing an option in an index, check out the political factors that may influence the country’s currency.
While strategizing on binary options, the cardinal rule to remember is that the risk factor is always proportionately higher when it comes to higher returns. So weigh all risk factors carefully against the return prior to positioning on the option. When opting for the Reversal Strategy, assume that the market will not stagnate at the extreme value and wait for it to move suddenly. Buy the option for the extreme value and wait for the asset to slide back to its original position, so that you can book a profit from this directional change of the asset.
The knock-on effect strategy is also useful and a proven one for binary options . This can be adopted by closely monitoring certain commodities which knock on each other. For example, if the index gets affected due to changes in stock prices or if wide price fluctuations in a commodity affects the country’s currency, the thing to do is to buy an option on a ‘secondary’ asset which has been affected.