Binary Options: Strategies for Directional and Volatility Trading

Alex Nekritin

John Wiley & Sons, Dec 17, 2012 - Business & Economics - 288 pages

The first comprehensive guide to trading a unique class of options to manage risk and make smarter bets during volatile trading

Providing savvy market players with a way to react quickly to event-driven opportunities and trends, exchange traded binary options are a unique type of derivative instrument offering fixed risk and reward. Available on four asset classes—stock index futures, commodity futures, Spot Forex and economic data releases—they are distinctly different from regular put/call options in that their pay-out structure offers only two potential outcomes, or settlement values: 0 or 100. The first guide focussing exclusively on this fast-growing sector of the options market, Trading Binary Options examines the key differences between regular options trading and binary options trading and describes how binary trading is done. It also gives you the lowdown on the most successful binary trading strategies and how and when they should be deployed.

• Outlines a rigorous approach to trading directionally around specific events, such as an earnings release, a shift in currencies, or a release of economic data
• Provides the first comprehensive coverage of an increasingly popular but poorly understood trading instrument
• Offers in-depth discussions of the six characteristics that distinguish binaries from other options and that make them such an attractive vehicle for hedging risk and improving returns

Contents

• AdvantagesDisadvantages of Binary Options: 13
• What Does Binary Mean?: 19
• Pricing: 29
• Reading a Binary Option Chain: 35
• trading Binary Options: 41
• Collateralizing a Short Binary Options Trade: 50
• Settlement: 59
• Commissions and Fees: 73
• Exiting Your Trade before Expiration: 81
• Keys to trading Binary Options: 95
• Binary Options trading Strategies: 105
• Regulating Success Probability and Payout with Strike Prices: 111
• Max Loss Collateral and Max Profit Summary Table: 120
• Binary Option Behavior: 123
• technical trading Strategies with: 129
• Breakout Trading: 135
• Political Events: 144
• Creating Your Binary Options Strategy: 153
• Three BackTesting Rules: 162
• Find the Right System for You: 168
• Practical Steps to Mitigate the Negative Emotions: 175
• risk Management: 183
• Risk Management on Option Spreads: 190
• Relationship between Position Size and Trading Psychology: 199
• Discipline of Expiration: 206
• System Cutoffs: 212
• Diversification and Account Distribution: 220
• vii: 223
• Premium Collection: 226
• Collect Enough Premium: 234
• Sell Far Enough Away from Market Price: 240
• Perform Additional Analysis in Order to Get: 246
• Attempt to Make Your Market: 255
• index: 263

About the author

ALEX NEKRITIN is CEO and President of TradersChoiceFX, TradersChoiceOptions, and TCForex, one of the largest introductory brokers in the world. Mr. Nekritin has been trading in equities, options, futures, and Forex very successfully for more than a decade. He holds a degree in finance with a concentration in derivative instruments from Babson College in Wellesley, Massachusetts. Alex's work has been featured online at FXStreet.com and TradingMarkets.com.

Bibliographic information

• Title: Binary Options: Strategies for Directional and Volatility Trading; Wiley Trading
• Author: Alex Nekritin
• Edition: illustrated
• Publisher: John Wiley & Sons, 2012
• ISBN: 1118407245, 9781118407240
• Length: 288 pages
• Subjects: Business & Economics / Accounting / General; Business & Economics / Finance / General; Business & Economics / General