One of the attractive aspects of binary options is a large number of trade options available. This selection allows traders to test and find the one or more trade options which fit with their trading style and which brings them the most profit.
One of the trade options available on plenty of trading platform is called Pair Options.
However, those traders in South Africa who are not yet overly familiar with binary trading and, by analogy, with trade options could probably use some additional info.
Therefore, this article will deal with the subject of pair options and how to trade pair options.
Pair Options Strategy
Binary options pair trading is an interesting trade option for those who want more portfolio options.
With normal binary options, South African traders trade by choosing whether the option will go up or down at the time of closing. With pair trading, traders actually pick two options and then decide which one they believe will end on top. One easy way of looking at this is by thinking of pair options as two teams playing a match.
Traders pick the two teams and then they speculate which one will be the winner. If their assumptions are correct, they will earn a profit.
Naturally, there is more to pair options trading, however, before we delve into more details on how to trade pair options there is one important fact we need to stress – suitability for newbie binary traders in South Africa.
Pair trading is a great way for beginners to invest because it doesn’t require much knowledge of the market to start trading with it.
We can actually define Pair Options as a direct and uncomplicated way to trade in the relative performance of selected underlying assets via making a prediction which underlying asset in the selected pair will have a better performance. If the prediction was correct the payout will follow. Another great thing about trading binaries is that South African traders know beforehand how much they stand to win or lose on every trade they made.
Benefit concerning directly the Pair Option is that traders also do not need to agonise over overall market movements. This is possible because due to the fact that even if, for example, the market does go down. South Africans trading binaries via Pair Options can still profit since the relative performance between the two underlying assets in the pair is relevant.
That means that even if the underlying asset, say a stock traders selected decreased in price, if the other stock within the pair also went down profit will still be made.
Hence, when traders opt to use this market-neutral strategy it actually works toward exploiting all the advantages the close correlation provides. That also opens up another path traders can take when it comes to how to trade pair options. That path is to place both call and put options.
On one underlying asset, they can place a call option on the other a put option. It is highly probable that one of the traders will be profitable. What is even better is that a number of trading sites even provide information on highly correlating underlying assets and provide traders with the opportunity to trade them which may lead to attractive profits.
Additionally, pair options and how to trade pair options is not a novel approach and it has been used as an effective approach for years. In fact, it was the now well-known binary broker Banc de Binary which first introduced pair options in 2009.
Therefore, we strongly advise prospective South African traders to take some time and study how to trade pair options. Especially those who intend to make trading binaries a long-term investment and bearing in mind that often a correlation between the pairs of underlying assets has already been puzzled out.
As we already pointed out, there are several trade options traders can select for trading binaries and not all of them are beginner friendly. Some deal with several prices and expiry times and are generally more complex.
This can be done by watching the market and the performance of an option. For example, you can choose to pair Google and Apple if you know Apple is about to release a new product (but Google is not) before the option expires.
New market releases are always a good sign that the option will perform well in the market, so your chances of being correct increase significantly.
Hence, it always good to keep an eye on the market and news. Especially the news which is closely connected to underlying assets traders wish to trade.
With time and effort, it will become easier to spot the patterns and make correct predictions based on the information at hand. That means that the question of how to trade Pair options becomes irrelevant as traders will know how what to do.
The key is not to rush in, keep in mind the risks associated with trading binaries in general and having the basic understanding what is involved in trading pair options.