In/Out Binary Options
In/Out binary options is another name for boundary options. This is a type of contract where the trader predicts whether an asset’s price will stay within a certain price range (in), or move outside of the price range (out), before the trade expires. There are not as many binary options brokers who offer this type of trade as there are who offer call/put contracts, but there are still a few to choose from – and we’ll be sure to be covering some of them in the reviews section of our site.
Basically, this type of trading option involves the decision whether to go in or out; and the aim is to decide whether an asset’s price action is in consolidation, or in a trend.
We’ve already looked at boundary options, and you can find more information here. So rather than go back over what we’ve already written, we suggest you take a few moments and read the page before returning here.
Now it’s time to look at some of the benefits of trading the options Forex market.
The Benefits of Trading Forex Options
If you decide to take advantage of a broker who offers Forex options, the biggest advantages are flexibility and the ability to trade variations. High yields are achievable, as much as 80% or more, in just a few minutes, if you can successfully predict the movement of a currency pair. Some Forex options brokers also offer a cashback should you lose your contract. There are a number of attractive first-deposit bonuses up for grabs as well.
With Forex options you can make the most of your trade. Say, for example, you choose GBP/EUR. You will need to decide whether the pair will end up below or above their current price over the course of an hour. If you consider it will move upwards you choose a call option. If think it will fall below the current price you choose a put option. If the closing price goes up from the price at which you purchased the call option, it means you’re in the money. You will also be in the money if you chose a put option and the closing price has gone down. You could make as much as 60 to 80% or more on this trade; and the price difference doesn’t have to massive, because even the smallest difference of a pip, whether over or under, can bring profits in less than an hour. Traditional Forex trading, on the other hand, requires a trader to gain at least 81 pips on a $1,000 x 100 leverage trade to make the same.
Binary options are a great hedging tool. Hedging is essentially decreasing the risk and possible volatility of an investment by reducing the risk of loss. Binary options tend to have short expiry times, which allow a trader to take advantage of any news events – particularly those that can trigger marker fluctuations, rather than place a stop loss.
Forex binary options are very popular because they can be used as a powerful hedging tool. They allow a trader to transfer any risk from below to above the buying point. A traditional long-position GBP/EUR with a stop loss purchased with a binary put option will enable you to cover any losses, and maybe even make a profit. In the event of the long trade position being unsuccessful, risk is transferred from below to above the stop loss. If prices continue to rally in the right direction it is far more likely to be a successful trade in the end. This is just another reason why so many people are turning to binary options trading: because it can be fun, exciting, and far less stressful than trading Forex on the traditional market.
The pros of binary options trading
- Great potential for quick payoffs – Some experts say you can expect a 70% or more return on capital in just a few hours, sometimes even minutes.
- It’s really simple – There aren’t a lot of decisions to make. All you have to decide is the type of asset, expiry date, and the amount of your position. Then it’s just down to deciding the direction versus the targeted value your broker has provided.
- Execution is easy – There are no timeframes to consider, leverage issues, or correlations to look out for.
- No stress or worry – This is particularly true when it comes to closing a position. Opening the position of an investment is the easy part. The difficulty comes when deciding the right time to sell. This is taken out of your hands with binary options trading.
- No fees or commissions – Costs are borne by the spreads within the rebate/pay-off structure.
- Risk is set at the point of execution. – There is no additional downside risk.
Let’s finish by saying, however, that binary options are not the pot of gold at the end of the rainbow. There are many unscrupulous service providers who only want to take your money, and of course the risks are high. That being said, if you follow the right advice and trade sensibly you’re going to have heaps of fun.