An Intelligent Binary Option Strategy To Lower The Probability Of Losing

Binary option trading in its most simple form presents a very unfavorable risk profile for the conservative trader. In general a binary option trading platform offers returns of 60% to 80% for winners and offers somewhere between 0% and 15% rebates for losers. So basically the expected value for one binary trade in the amount of $100 on a leading binary option trading platform is approximately -$23. So for every $100 you trade you should expect to lose $23, right? Well yes and no. If you decide to place one trade on one option during one expiration period then yes you should expect to lose $23 for every $100 you spend. However, I did say the answer was yes and no. To improve your chances of winning it is best you use a solid binary option strategy, one that can shift your odds of profitability into your corner. A binary option strategy we at DerivStrategies.com recommend is the 2nd trade hedge strategy.

What exactly is the 2nd trade hedge binary options strategy and how can you utilize it? Well the 2nd trade hedge binary options strategy involves purchasing a 2nd option on your initial trade to lock in a ‘profit zone’. This can best be described by example:

Say at 2:05 pm you buy a binary call option on Apple (AAPL) with a strike price of $250. Things go fairly well over the next 30 minutes or so and your $250 binary call option is in the money trading around $252. But the lock-out period is fast approaching and you really are not comfortable leaving your position out there knowing that a sudden decline in stock price could leave you down 85%. Instead of risking the full amount of the trade, you can hedge some of the risk by implementing the 2nd trade hedge binary options strategy. Simply purchase a binary put option on shares of AAPL with a strike price of $252. By doing this you have essentially locked-in an area of profitability, a ‘profit zone’, with shares of AAPL trading between $250 and $252. So instead of losing 85% if shares of AAPL finished below $250 and winning 70% if shares of AAPL finished above $250 at expiration your risk profile looks like the following:

With shares of AAPL below $250 or above $252: You lose 15%.
With shares of AAPL between $250 and $252: You win 70%.

While the area of profitability is smaller under the 2nd trade hedge binary option strategy, the maximum loss amount has been significantly reduced from -85% to -15%. We recommend utilizing this binary option strategy whenever possible to effectively manage risk. To keep up to date on alternative binary options strategies, hedging tips, broker reviews and such, visit DerivStrategies.com and signup for the Binary Options Weekly, a FREE weekly report preparing binary options traders for the week ahead by providing insightful market commentary, key macro and stock specific catalysts, and recommended strategies and tips to boost your trading profits.

Shortcut to pragmatic information about the topic of online marketing – please read this webpage. The times have come when concise info is truly only one click of your mouse, use this opportunity.