Get More Trading Options from Option Range

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Get More Trading Options from Option Range

Option Range is a leading binary options trading platform catering to traders across the world. The trading platform, which is powered by TradoLogic, will be allowing range binary options trading in shorter intervals of 30 and 60 minutes. However, these new range options will be available only for a limited period and can be used for EUR/USD, GBP/USD and the EUR/GBP currency pairs. The return ratio of these new options is a whopping 171%.

Wide array of trading options

Currently, Option Range has a good assortment of trading options for all the assets it covers, including commodities, currencies, stocks and indices. Investors using the Option Range trading platform have three trading options – digital trading, touch trading and range trading.

Under the digital trading option, a trader will predict the performance of the asset and is considered to be in-the-money if he gets it right and out-of-the-money otherwise. In the touch trading option, a trader gets to predict if a particular asset will ‘touch’ a predetermined strike price within a given time frame, or not.

The new range options allow the trader to predict if the value of the asset will remain between two preset points (prices) within a particular time period, which is 30 minutes or 60 minutes.

More assets to get new trading options

Option Range has also announced that it plans to add more number of trading options for its other assets, for which it would increase the maximum trade amount. With regards to its new options, the company has received a positive response from its members, after it had offered a 20% bonus to all the deposits above $100, till February 19, 2020.

Suitable trading options for beginners and experts

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Whether you are a novice or a seasoned binary options trader, Option Range has excellent trading options for you. The trading platform is easy to use and is considered as one of the most secure in the world. The platform can be accessed directly through your web browser, and requires no download or installation. The platform also offers tools such as Close, which allows traders to close their trade before expiration, and Extend, which allows them to extend the option’s expiration time after buying.

Range Binary Options

Binary options are a form of instrument which give the buyer a set cost and payout on a set prediction on whether the price of an underlying asset will move up, down, or sideways, in our outside one or more specified levels. Trading binary options can be profitable when utilised in certain market conditions, though do not always offer better value over trading straight forward spot markets. For those new to the world of binary options, the variety of different types of binary options available may seem complicated or hard to understand. These pages are dedicated to explaining the differences between the various types of binary option. It is just as important to choose the right binary option type is it is in picking the right binary options broker.

In this section we will take a look at range options.

What are range options?

Range options are used by binary options traders when speculating whether an asset will stay within a specified price range over a certain length of time. This type of option is also known by a number of different names, including boundary and tunnel options. To achieve a payout with a range option, the price of the underlying asset needs to stay between two given strike prices (or barriers) over the period of the contract (the expiry period).

How range option trading works

Range option trading has become popular with traders, as they can offer high returns in a quiet or stable market. It is worth noting however, that not all binary options brokers offer this particular type of option. The basic principle behind this type of option is quite simple, but in choosing when to use it and whether it offer better rewards to traditional range trading in FX is the hard part. Not to worry, though, as we will aim to cover all aspects and their advantages and disadvantages. Let us look at the basic structure and explain how range options trading works.

As above, we have stated that a range option is one which looks to profit from an asset price staying within a price range over a set period. First, the trader decides on the limits of the range he believes the underlying asset will stay inside and set the barrier levels accordingly, then he will set the time – or expiry date he believes it will be achieved in. In the retail market, the range prices or limits will usually be fixed by the broker, ie they will offer a number of choices to the ranges one can trade. As with all other binary options trades there are only two final outcomes. The option is either ‘in the money’ or ‘out of the money’. If the price of an underlying asset remains within the specified price range, the option is ‘in the money’ and the buyer will receive a payout determined at the outset. If price moves outside or breaks the set range, then it is ‘out of the money’ and the buyer receives nothing, losing the premium paid for the option. As we will see in other structure, discussed on other pages, brokers can also offer out-of-range options, which will profit if the price breaks out of the preset range within the time or expiry period of the option.

For now, it is clear that if a trader believes an underlying asset is about to enter a quiet period, he can choose to try and profit from this with a range option and depending on the limits set, can achieve a healthy return. This depends on the range set however. If the trader chooses a tight range, then the payout will be higher in percentage terms as the contract will have a higher chance of being breached (or broken). The wider the limits, the less chance of it being breached, so the amount of payout will be lower. It all depends on where the trader decides to set the range.

As such, if the trader does not believe the payout offered by a certain range is enough to justify the risk – in this case the cost of the option (the premium) -, then he/she will be better off with trading the range in the spot markets, setting his stop loss against the limits he would choose either side of the market. There is no premium to be paid, and the trader will also have the freedom to exit the trade at any time, freeing up capital for other opportunities or trades which may come up.

As attractive as some of these options and their payouts may be, traders will have to consider the premium they pay and how much of their capital (trading amount) is tied up on one trade.

There is also one other factor to consider and that is the triggering of limits. It is not unknown that the market can push for certain levels to look for orders. Buying a range option can leave a buyer vulnerable to irrational spot moves, so trading straight forward FX also offers a more flexible approach with this in mind.

AN EXAMPLE OF RANGE OPTIONS TRADING

Using an example is always easier to understand a concept so below is one to show the process and reason for trading a range option.

A trader is focusing on the price of Apple stocks, which is trading at $500 (for example is not a reflection of the real market price). The company’s quarterly returns are about to be announced and he/she believes they will fall as analysts have forecasted. The trader may believe the stock price may fall a little, though the move will be relatively small and remain overall little changed. Your binary options broker offers a range option with a price range of between $485 and $515 and a set payout should price hold this range. The trader can buy this option in the belief that Apple’s stock price will see little change and hold is price over a set period. In paying the broker for this option, if price behaves as the trader expects, the option will pay out a preset amount. If it breaks the range, the buyer receives nothing and he/she loses the premium paid to the broker for the option. As we can see, there are clear risks, and as attractive as the payout can be, there is clear risk in losing the amount paid for the option. The trader will have to determine whether he/she sees value in committing capital to a trade which can come to nothing.

Should the trader decide that the payout is not worth the risk, then trading the underlying stock price after the data has been released can offer a better risk to rewards and also give him the flexibility to trade at any time. Once the option is bought, then it is a case of ‘sit and wait’.

Tips on how to trade range options successfully

If you think that range options are for you, then keep reading, because we’re about to share some important tips. After all, you must be interested in any advice on how to become more successful, surely.

How To Day Trade Options for Income (Best Way To Do It?)

So you’d like to start day-trading options for income?

That’s great, but first you need to know about the nature of options and the risks involved. Otherwise, you could end up losing a lot of money.

Beyond that, you need to develop the self-confidence necessary to become a profitable day-trader.

In this guide, I’ll cover the basics of options, the advantages and risks associated with day-trading options, and some tips on getting a winner’s mindset.

If you follow through correctly, you can generate a steady stream of income that’s immune from the broader market’s gyrations. The strategies outlined below are time-proven and should come in handy as you try to cope with the market’s extreme uncertainty in 2020.

What Are Options?

Options are financial derivatives.

Don’t let that word scare you. A derivative is just a contract between two parties about the sale of an underlying financial asset.

Specifically, an option gives you the right, but not the obligation, to buy or sell an asset at a given time for a specific price.

Why would anyone want to do that? To make a nice return, of course.

For example, suppose Bank of America (NYSE: BAC) is trading at $26 per share right now. You think it’s going to skyrocket in the near future.

Somebody who owns stock in Bank of America comes along and gives you the opportunity to buy the shares for $28 each next month. But to do that, you’ll have to pay the person $1 per share right now.

If you believe that Bank of America will hit at least $30 per share in the next month, why wouldn’t you take that deal?

You’d effectively buy the shares for $29 each ($28 for the shares plus the $1 per share charged by the seller). If the stock hits $30 (or higher) as you predicted, you could immediately turn around and sell those shares for a nice profit.

That, in a nutshell, is what stock options allow you to do. They give you the opportunity to buy or sell shares of an underlying stock at a specific price and on a specific date.

When’s a good time for ordinary investors to take the plunge and trade options? That depends on your investment profile.

“Or Sell”?

Yes, in the example described above, you have the option to buy shares of Bank of America for $28 each. But someone can also sell you the option to sell shares.

The person can do that if her or she is short Bank of America stock.

You’d take that deal if you think that shares of Bank of America will plummet in the near future. Then, you can sell the shares at an above-market price for a profit.

It’s important to distinguish between options that give you the right to buy stocks versus options that give you the right to sell stocks. They go by different names.

  • Call options – give you the right to buy the underlying security at a specific price on a specific date.
  • Put options – give you the right to sell the underlying security at a specific price on a specific date.

You’d buy a call option if you’re bullish on the underlying stock.

You’d buy a put option if you’re bearish on the underlying stock.

Strikes: Not Just for Bowling

Remember: an option is a contract. As with any other contract, there are specifics spelled out.

One of those specifics is the price at which you will buy or sell the underlying stock. That’s called the strike price.

In the Bank of America example above, the strike price is $28. That was the price you would have paid for the shares had you taken that deal.

When traders talk about stock options they often use phrases like “in the money,” “out of the money,” and “at the money.” Those phrases all relate to the strike price.

A call option is in the money when its strike price is lower than the current market price of the underlying stock. It’s out of the money when its strike price is higher than the current market price of the underlying stock.

A put option is in the money when its strike price is higher than the current market price of the underlying stock. It’s out of the money when its strike price is lower than the current market price of the underlying stock.

Any kind of option is at the money when its strike price is equal to the current market price of the underlying stock.

Contract Expiration: The Shelf-Life Explained

Options contracts also have an expiration date attached to them. That’s when the person who owns the option can exercise his or her right to trade the shares at the strike price.

The word “can” is important in that last sentence. In some cases, the person might not want to buy or sell the shares when the contract expires.

Why? Because if the option is out of the money, there’s a better deal on the open market.

Let’s go back to the Bank of America example above. Suppose that shares of Bank of America are trading at $26 on the open market when the contract expires. Would you really want to buy them for $28 per share as the option contract stipulates?

Of course not. You’d get a better deal on the open market. In that case, you wouldn’t exercise your right to buy the shares from the person who sold you the option.

When options expire out of the money, they’re said to expire worthless.

Worthless Options Aren’t Always Worthless

Although options that expire out of the money are called worthless, they’re sometimes quite profitable to options traders.

That’s because traders can sell options as well as buy them. When they sell options, it’s just like shorting them.

In that case, they want the options to drop in value or expire worthless. That’s how they make money.

If you’re bullish on a stock, you can sell a put option instead of buying a call option.

If you’re bearish on a stock, you can sell a call option instead of buying a put option.

There are some caveats, though.

First, keep in mind that you can take enormous losses when you sell options. In the case of selling a put option, your loss can theoretically be infinite because there’s no limit to how high the underlying stock can rise.

Also, your online brokerage will place rules on selling “naked” puts. There will be significant margin requirements in case the trade goes the wrong way.

The Price Isn’t Right

When you look at options chains for specific stocks, you’ll see that they’re usually traded at a much lower price than the stock itself.

Go back to the Bank of America example above. The $28 call option was trading for just $1.

That doesn’t mean it costs only a dollar to buy the option.

Options contracts are bundles of 100 shares. So you have to multiply the price of the option by 100.

If you were to buy the Bank of America $28 call option for $1, you’d really pay $100 ($1 x 100 shares = $100).

That’s something you need to keep in mind as you trade options.

Also, as is the case with stocks, you buy options contracts at the Ask price and sell them at the Bid price.

Day-Trading Options: The Advantages

Now that we’ve covered the basics, let’s look at the advantages of day-trading options.

  • Ease of trading – First and foremost, options trade just like stocks. If you buy an option this morning and its price goes up in the afternoon, you can sell it for a profit. So if you already like day-trading stocks, you’ll be happy to know that you can trade options in much the same way.
  • Leverage – With stock options, you can earn a very nice return with just a little bit of money. In the case of the Bank of America call option above, if the price of the underlying stock rose from $28 to $29, then the price of the option would rise from $1 to about $2. In that case, the price of the stock increased by a small percentage, but the price of the option almost doubled.
  • Low cash requirement – It’s safe to say that if you want to generate a decent income as a day-trader, you need to start with tens of thousands of dollars (or get very lucky). However, you can start with much less money if you trade options instead of stocks. That’s because of leverage (see above).
  • Diversity – Because options are so much cheaper than stocks, you can more easily create a diverse portfolio so that you’re protected if one sector goes south in any given day.
  • Ability to hedge – Because you can buy and sell both put and call options, you have the opportunity to work both sides of the market. You can protect much of your capital in the event that something goes horribly wrong on the long or short side.
  • Reduced risk of loss due to time-decay – Options have a contract expiration date so they’re subject to time-decay. That means the option price will drop every day as it gets closer to expiration, all other things being equal. Traders who are long on options for weeks (or even months) will often see their positions drop gradually to $0 even though the underlying stock doesn’t move. People who day-trade options, however, won’t need to worry as much about time-decay.

Day-Trading Options: The Risks

There are plenty of advantages to day-trading options, but there are risks as well:

  • Risk of significant loss – Although leverage can give you significant gains, it’s also a two-edged sword. You can take enormous losses because of leverage. Going back to the Bank of America call option above, if the stock dropped from $28 per share to $27, the option price would drop from $1 to just a few pennies. That’s a loss of almost 100%!
  • Wide spreads – Options aren’t always as liquid as their underlying stocks. As a result, the bid-ask spreads can get fairly wide. That means even if you’re right about the movement of the stock, its option might not make you a whole lot of money after you close out the position.
  • Less chance to profit from time-decay – Although you don’t have to worry about time-decay on your long positions when you’re day-trading options, you also can’t benefit much from time-decay when you’re short. You aren’t holding the position long enough to see any significant gains.
  • Margin requirements – If you plan on selling options, your online brokerage will have margin requirements. Those requirements vary from broker to broker, but they could be quite steep.

Do You Have a Guerrilla Mindset?

It takes more to be a successful options day-trader than a simple understanding of the pros and cons. You also have to develop the right mindset.

You need to approach options like a guerilla fighter.

If you’re already successfully day-trading stocks, you may be part of the way there. But you’re not all the way there.

Why? Because trading options is like trading stocks on steroids.

Remember: options use leverage. That means small swings in stock prices can send your position tumbling 100% very easily. You’re not accustomed to seeing that kind of loss very often with stock trades.

In other words, you really need to know how to ride out swings in prices. When your hard-earned money is on the line, that can be a challenge.

If you’ve never day-traded stocks before, your current assignment can be explained in one word: practice.

Find an online brokerage that allows you to practice trade with an account that doesn’t use any real money. Usually, you can set up a fake portfolio with $10,000 or so and start trading.

Then, put your strategy for picking winning options trades to the test. See if it passes.

When you take losses (and you will), learn from your mistakes.

When you make nice profits (and you will), find out what you did right.

Then, practice some more. Get to the point where you’re confident enough in your abilities as a trader that you’re willing to risk some real money.

At that point, start small. Don’t trade a significant percentage of your cash at first.

You’ll find that your mind thinks about a trade with real money quite a bit differently than it did about a trade with fake money. You’ll need to discipline yourself to stay focused.

And, once again, learn from your successes and failures.

Once you develop even more confidence, start trading with more of your money. All along the way, train yourself to stay focused, disciplined, and fearless.

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  • BINOMO
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    2nd place in the ranking!

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