Binary options on the GBP/USD: A few approaches
February 16, 2012 2:01 AM EST
The question is what might be the best approach to trading the news. Traders could look for signals to trade technical breaks or surprise announcements before and during Governor King's talks. With a binary trade, such as an hourly CALL or PUT option on the pair, the decision boils down to direction and value at risk. For example, in a downtrend you might want to place an $850 hourly PUT option on the pair with a 70% return. If the insurance on the trade were 10% you would have either $1,445 or $85 back from the trade. (Alternatively, the example above shows a current 85% return on the trade, with 0% insurance for out-of-the-money expiration).
If you don't fancy trading on the news, another approach would be to trade on the technicals thru near-term (hourly) support and resistance levels. In this regard a trader might be agnostic to the news on the pound and Governor King's comments, focusing instead on the technical bounce off a support line, or pull back from near-term resistance levels. The hourly window could be a good consideration particularly if impact on longer time frames are less clear.
Last point for consideration for more advanced traders is a hedge on the pair. It could be interesting to set up a binary hedge on the GPB/USD with conventional forex positions, trading for example a bearish FX strategy together with an hourly CALL option to hedge against a potential failed breakout.
Start trading Binary Options with TradeSmarter!
Most Popular Slideshows
- 2014 MLB World Series Game 1: San Francisco Giants 7, Kansas City Royals 1 [PHOTOS]
- 2014 MLB World Series - Game 2: Kansas City Royals 7, San Francisco Giants 2 [PHOTOS]
- NFL Thursday Recap - Denver Broncos 35, San Diego Chargers 21: Peyton Manning Has 3 TDs In Easy Win [PHOTOS]
- 2014 MLB World Series Game 3: Kansas City Royals 3, San Francisco Giants 2 [PHOTOS]
Join the Conversation
- Xiaomi Redmi 1S vs. Sharp Aquos Crystal – Specifications, Features And Price Showdown
- Verizon Motorola Droid Turbo Leaked Live Images Surfaces, Scheduled To Get Unveiled On Oct 28
- Update HTC One M7 with LG G2 with Android 4.4.2 as Sprint OTA: Fixes and Installation
- U.S. Targets Buyers of ISIS Oil, Threatens Sanctions
- ISIS Syria Airstrike Bombing Has Killed 550 People, Civilians Included
- Russia Blocking OSCE Monitoring Of Its Border With Ukraine
- Russia Slams US 'Double Standards' In The Fight Against ISIS