BINARY OPTION STRATEGIES & MANAGEMENT

As an entertaining and interesting trading method, binary option trading is becoming popular among the investors day by day.

A lot of binary option strategies are available which the traders use in order to succeed in trade. The basic concepts of all binary option strategies are the same although different investors follow different strategies. As opposed to other trades, binary option trading offers only two probable outcomes, loss or gain.

In binary option trading the turnover is fast which is yielded by calls and puts. Because of this if a good binary option strategy is used, traders would see most of their investments bringing high returns.

There are some basic strategies followed by all traders concerning the binary option strategy guide. The first one is the pairing up of an “in the money” call and money put. That’s why you can still earn money if the spot price is between the two prices at the expiration.

Another useful strategy in binary option trading is the pairing the put with a call into a hedge and double position. This binary option strategy helps to make very high profits.

Binary option betting strategy is another very popular strategy. In this strategy an investor uses a pull or call option if an unexpected move occurs on the market. This strategy is based on the fact that people put positions on indicators which have large scale impacts on the market prices.

Strategies to Help You Get Started with Binary Options Trading

It should come as no surprise that binary options trading is fast emerging as a great alternative  investment channel and a genuine one at that. With real estate prices taking in 2008 and witnessing huge fluctuations ever since, people all around have been looking to find new ways to invest their personal finances.

Binary options trading has been gaining steam in the recent times as more & more people are reading about the simplicity of the binary options trading and the potential return on investment. The fact that it can be done completely online has also seen a lot of work from home moms and even working professionals experiment with binary options trading in spare time. While binary options trading is definitely becoming a viable investment vehicle, there are some risks to binary options trading just like any other investment. Therefore, it always helps to learn the right strategies for binary options trading before you jump into it.

Here are some binary options trading strategies that should come in handy if you want to start with binary options trading:-

JPASSOSIAT STRANGLE STRATEGY UPDATE

Book profit in JpAssosiat 90 put @ 2 and  contd..to hold call

CALCULATION OF P & L IN OPTION

While it comes to calculation, there is thing we have to learn  how to calculate profits/losses are calculate. 

Let’s go with an example, nifty to understand better how profits and losses are calculated in options trading. The lot size of nifty is 50 shares in number irrespective of call or put. The profit/loss does not depend on the type of call (nifty call option or nifty put option), expiry or strike. It directly depends only on premium which trader selects while purchasing the option.

HEDGE A CALL OPTION WITH A PUT OPTION ?

Sometimes an investment has made substantial gains, but you're not ready to sell the assets just yet. At the same time, you don’t want to risk losing the profit you’ll get by cashing in immediately. When you face this dilemma with call options, you can hedge your position with offsetting put options.

Calls and Puts

When you purchase call options on stock or another underlying security, you receive the right to buy shares at a designated price called the strike price. You can exercise your right to buy until the option expires, but you are not required to do so. Put options work exactly the same, except you get the right to sell a security instead of buy it. Suppose you buy a call and put option contract for the same stock at the same strike price. If the stock price increases, you would exercise the call to buy shares at the lower strike price, and then sell at market value, netting a profit. The call option is said to be “in the money.” The put option has no value, because you pay more to buy the shares needed to exercise the option than the strike price you are paid. However, if the price of the stock falls instead, the call option would have no value and the put option would be in the money.

OPTION TRADING STRATEGIES : HOW TO USE THEM FOR MAKING PROFIT IN ANY MARKET SITUATION

 How to Use Option Trading Strategies in any Market Situation

Option strategies are implemented by combining one or more option positions and possibly an underlying stock position.

In other words, a trading strategy is a calculated way of using options singly or in a combination, in order to make a profit from market movements.

Option strategies can give you a greater profit with less risk compared with the traditional buying and selling of stock.

One vitally important thing to consider when investing is when to get out and how. An effective exit strategy needs to be decided upon in advance, and stuck to without allowing emotions to sway you.

There are many types of option trading strategies that can be applied, depending on your opinion, or ‘prediction,’ of which direction the underlying stock is going to move.

A guideline for picking the right stocks to go with the right options strategies is available by reading “Options Strategies for Different Stock Styles”. The various stock movements are taken into account – bullish and bearish – as well as major moves, or slower, moderate moves, in either direction - and a strategy that can be applied to each of these movements.

JPASSOCIAT STRANGLE STRATEGY

Buy Jp assosiat 90 CALL @1.4       

Buy Jp assosiat 65 PUT   @ 1.4

COST =2.8

RISK PER LOT = 22400

RETURN = UNLIMITED

UPPER BREAK GIVEN POINT=92.8

LOWER BREAK GIVEN POINT=63.2

Pay off table:..

Low Capital Needed In Option Trading as Compared To Stock Future

Option trading is a trader friendly kind of trading which allows the trader to find new ways of doing business. It has many strategies and the trader is allowed to choose any one of them or plan a strategy of his own master it and earn profit. Other trading such as stock trading and future trading does not support this feature and have their strict rules which must be followed to do business. Moreover, if recession occurs there is no way by which the trader may safe his money. He may lose all of it or his money may stick in the market.
One of the major benefits of option trading is that you can start trading with even low capital invested. Then use that profit to re-invest and earn even more money. So this trading style supports a small business to flourish and is giving the new traders to trade without getting loans and selling their personal property to do business. While in future or stock trading sometimes the traders bears so much loss so as to leave the business or sell their personal properties to compensate the effect....

Index Vs Stock Option

Index and stock options are known as unique investment opportunities for all men and women who want to make it big in the investment market. However, there are certain peculiarities between index and stock options. 
Index Option 
Index as a type of investment trading is simply a list of number of various stocks that are quite similar to one another. Index option signifies the composite value of all the stocks in question.  in the Indian Stock market, index option is used to evaluate the progress of the Indian economy.  It is also used in determining the general overview of the stock market in a given economy.
Stock Option
Stock option is usually referred to as a legal contract which grants the contract owner the right to purchase or sell stock of a specific quantity at a particular set price before a specific date. Stock option is usually has a standardized term. It has the ability to pull sellers and buyers together in a fantastic manner.  Stock option usually has two main varieties namely; the call option and the put option.  Call option grants the owner the right to buy the stock at a fixed price over a fixed period of time, while put option grants the owner the right to sell the stock at a fixed price over a specific period of time. 
Well, having seen both index and stock option, one can easily find out that both of them also belong to the same category in the capital investment market.  Really, the index option is usually well known by almost every ordinary human person.... 

COMPARISON BETWEEN CASH AND FUTURE TRADING

1.In the cash segment, one can pick up as many shares one wants starting from just one share but Futures, a trader cannot buy less than the lot size prescribed
2. From an investors point of he should invest in Cash Segment. Since Futures are a trading tool, the risk is also high to a large extent.
3. In Futures, a trader needs to pay 33% tax on the profit. In equity, it is a flat proportion of 10% (short term capital gains) if trading done is within a year and no tax if sold later a year (long term capital gains).............