December 2012
Intermediate to advanced
288 pages
6h 42m
English
Content preview from Binary Options: Strategies for Directional and Volatility Trading
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
O’Reilly covers everything we've got, with content to help us build a world-class technology community, upgrade the capabilities and competencies of our teams, and improve overall team performance as well as their engagement.I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.I’ve been on the O’Reilly platform for more than eight years. I use a couple of learning platforms, but I'm on O'Reilly more than anybody else. When you're there, you start learning. I'm never disappointed.I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.
CHAPTER 4
Binary Options Contract Collateral
MARGIN AND DEBIT RISK OF VANILLA OPTIONS AND FUTURES
Unlike vanilla put/call options, binary options are fully collateralized. This means that regardless of whether you are buying or selling an option, you cannot lose more than you put up per contract on the trade.
When trading commodity or stock index futures without the use of binary options, the trader is trading on margin. When trading on margin, you are using a small amount of money to control a larger amount of an asset class. This means that if you are trading futures or options on futures, you can lose more than you put into the trade. In plain and simple terms, that can be scary, especially if you are holding positions overnight.
Trading volatility is trying to speculate on the magnitude of a price movement of the underlying asset within a certain time frame. When trading volatility, you are not trying to forecast market direction but simply the size of the move. In simple terms, you are speculating whether an underlying will stay within a certain range or trade outside of a certain range by expiration.
If you use vanilla put/call options to speculate on market ranges, you will be trading on margin. This means if the underlying makes a drastic move outside of the range that you predicted, you may lose more than you put into the trade.
One great factor of trading binary options is that your trades are fully collateralized. This means that you can never lose more than you put ...
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Read now
Unlock full access
More than 5,000 organizations count on O’Reilly
O’Reilly covers everything we've got, with content to help us build a world-class technology community, upgrade the capabilities and competencies of our teams, and improve overall team performance as well as their engagement.Julian F.
I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.Addison B.
I’ve been on the O’Reilly platform for more than eight years. I use a couple of learning platforms, but I'm on O'Reilly more than anybody else. When you're there, you start learning. I'm never disappointed.Amir M.
I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.