Binary Options Straddle Strategy
It is widely used in common trades. Binary options straddle strategy implies someone buyes call and put having the same price and life span. Now those traders who switched to Binary Options really want to know if it is possible to use this kind of strategy to binary option trading and what should be changed.
What This Binary Options Straddle Strategy is About?
This strategy is often implemented in usual trades when an asset price is expected to change, but a trader is not sure what direction will it move. So, buying both options s/he can get money apart the direction of the price movement as in the instance of significant movements the sum brought with one of the options covers the costs for the second one. For instance, today is a day when a stock is going to present its annual report. Traders and brokers have some special expectations to it.
If the expectations are satisfied, the price will increase greatly; otherwise, the price will drastically drop. This situation is excellent for a straddle. If a trader buys both, a call and a put, at the same price, it will be possible for him / her to defray the costs and even have profit from that great movement.
How to Use Binary Options Straddle Strategy
It is not easy to adopt this strategy to binary options. A trader can easily get lots of problems, if s/he starts applying it buying high/low options.
The main problem for adapting of this strategy is its fixed winning percentage which never depends on the price shift volume. So, it is impossible to defray the loss for the second option. E.g.: It is usually impossible to get more than 70% 90% of any High/Low trade, and this strategy can help you receive 50% of all trades. So, the best result you may have with it is 190% * 0.5 = 95% of the sum invested. That is, your money will definitely be wasted, if you begin trading High/Low options with that kind of strategy.
Are There Any Alternatives To Binary Options Straddle Strategy?
In order to use this binary option strategy successfully, you should get more than 100% of the money invested. One of the possible ways is to trade touch options. This kind of option gives you an opportunity to get to 500 % if you predict correctly. But normally the strike price is too far from the current one. So, whether you are sure some great price shift will happen but not sure what direction it will move, you may utilize the straddle strategy and purchase touch options in both directions. Whether the forecast is correct and the price touchs one of the two options, you will get the profit that will be able to cover the money wasted for the other option and as well give you a good profit.
But it is much easier to utilise a straddle trading boundary options which define lower and upper price levels. Whether you are able to forecast an asset price breaking these boundaries correctly, you will receive a good amount of money. But the boundary option is already a straddle and there is no need to buy two options.
Unfortunately, some brokers do not offer boundary options; so, make sure your broker has the feature.