Binary Options Trading Strategies – Straddle

The straddle requires the purchasing of both a Call and a Put option on the same asset.  The trader ‘straddles’ the asset at a low and a high point with the area in between the two points possibly being twice as successful. This strategy can be particularly useful in volatile markets.  If the expiry price falls between the two levels the trader will finish in the money on both, therefore maximizing his returns.  The worst case scenario is that the trader will at least make one correct prediction and therefore minimize his losses.

Setting up the straddle can be a little more complicated than other strategies but is still one of the most worthwhile strategies in binary options trading. The aim is to place a Put as high as possible. When the market drops, the trader places a Call in the opposite direction as it returns back up allowing him to have at least one trade in the money offering a minimal loss or to achieve success in both trades and gain a substantial reward.  It is not necessary to purchase the Call and Put options at the same time.  An initial option can be purchased with a longer expiry and the second option can then be purchased once the asset’s direction becomes more obvious.

It should be noted that the straddle in binary options trading differs from vanilla options as both have different purchase prices and exercise rights.

Binary Options Trading Strategies – Straddle Video

 

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