The first comprehensive guide to trading a unique class of options to manage risk and make smarter bets during volatile trading Providing savvy market players with a way to react quickly to event-driven opportunities and trends, exchange traded binary options are a unique type of derivative instrument offering fixed risk and reward. Available on four asset classes--stock index futures, commodity futures, Spot Forex and economic data releases--they are distinctly different from regular put/call options in that their pay-out structure offers only two potential outcomes, or settlement values:…mehr
The first comprehensive guide to trading a unique class of options to manage risk and make smarter bets during volatile trading
Providing savvy market players with a way to react quickly to event-driven opportunities and trends, exchange traded binary options are a unique type of derivative instrument offering fixed risk and reward. Available on four asset classes--stock index futures, commodity futures, Spot Forex and economic data releases--they are distinctly different from regular put/call options in that their pay-out structure offers only two potential outcomes, or settlement values: 0 or 100. The first guide focussing exclusively on this fast-growing sector of the options market, Trading Binary Options examines the key differences between regular options trading and binary options trading and describes how binary trading is done. It also gives you the lowdown on the most successful binary trading strategies and how and when they should be deployed. Outlines a rigorous approach to trading directionally around specific events, such as an earnings release, a shift in currencies, or a release of economic data Provides the first comprehensive coverage of an increasingly popular but poorly understood trading instrument Offers in-depth discussions of the six characteristics that distinguish binaries from other options and that make them such an attractive vehicle for hedging risk and improving returns
ALEX NEKRITIN is CEO and President of TradersChoiceFX, TradersChoiceOptions, and TCForex, one of the largest introductory brokers in the world. Mr. Nekritin has been trading in equities, options, futures, and Forex very successfully for more than a decade. He holds a degree in finance with a concentration in derivative instruments from Babson College in Wellesley, Massachusetts. Alex's work has been featured online at FXStreet.com and TradingMarkets.com.
Inhaltsangabe
Foreword xi Preface xiii acknowledgments xvii Part I Introduction to Binary Options 1 Chapter 1 What are Binary Options? 3 On What Asset Classes Are Binary Options Available? 3 Binary Options vs. CBOE (Vanilla) Put/Call Options 10 Advantages/Disadvantages of Binary Options 13 Reasons to Trade Binary Options 14 Part II Binary Options theory 17 Chapter 2 What Does Binary Mean? 19 Components to a Binary Option 20 Long Trading 22 Short Trading 24 Chapter 3 Pricing 29 Strike Price 29 Time Value 30 Price as a Natural Market Consensus 32 Reading a Binary Option Chain 35 Part III Trading Binary Options 41 Chapter 4 Binary Options Contract Collateral 43 Margin and Debit Risk of Vanilla Options and Futures 43 Collateral Explained 44 Binary Options Expiration Values 44 Collateralizing a Long Trade 45 Collateralizing a Short Binary Options Trade 50 The Mechanics of a Binary Options Short Trade 50 Chapter 5 Settlement 59 Settlement on Binary Option Long Trades 59 Commissions and Fees 73 Chapter 6 Entering and Exiting Binary Option Trades 75 Reading Quotes 75 Reading an Order Ticket 76 Exiting Trades 78 Exiting Your Trade before Expiration 81 Chapter 7 Keys to Trading Binary Options and More Examples 95 Gold Binary Examples 96 Copper Binary Examples 99 Part IV Binary Options Trading Strategies 105 Chapter 8 Volatility Trading Explained 107 Taking a Volatility Long Position (Buying Volatility) 108 Regulating Success Probability and Payout with Strike Prices 111 Taking a Volatility Short Position (Selling Volatility) 113 Regulating Range and Payout with Strike Prices 116 Max Loss, Collateral, and Max Profit Summary Table 120 Chapter 9 Binary Option Behavior as Expiration Approaches 123 Understanding Delta 123 Delta and Price 127 Chapter 10 Technical Trading Strategies with Binary Options 129 Support and Resistance 130 Breakout Trading 135 Chapter 11 Fundamental Trading Strategies with Binary Options 139 News Releases 139 Political Events 144 Speculating on Actual News Releases 147 Economic Data Releases that You Can Speculate On 149 Part V Creating Your Binary Options Strategy 153 Chapter 12 Systems with Binary Options 155 Finding Your Edge 155 Proper Trading System Development 156 Back-Testing Binary Options Strategies 158 Three Back-Testing Rules 162 Chapter 13 Negative Emotions 165 Greed and Fear 166 How to Handle Negative Emotions 166 Find the Right System for You 168 Practical Steps to Mitigate the Negative Emotions 175 Chapter 14 Risk Management 183 The Process 184 Determining Position Size 185 Risk Management on Option Spreads 190 Relationship between Position Size and Trading Psychology 199 Handling Unexpected Market Volatility 199 Benefits of Binary Options on Trading Psychology 202 Discipline of Expiration 206 Part VI Managing Your Binary Options Account 209 Chapter 15 Proactive System Improvement 211 System Cutoffs 212 Drawdown 212 Consecutive Losing Trades 215 Reinvestment Rate 216 Diversification and Account Distribution 220 Intersystem Diversification 220 Account Breakdown 221 Part VII Profiting with Volatility 223 Chapter 16 The Volatility Short Trading Rules 225 Premium Collection 226 Rule 1: Cut Off Your Losing Trades 231 Rule 2: Collect Enough Premium 234 Rule 3: Sell Far Enough Away from Market Price 240 Rule 4: Use Underlying Instruments that Revert to the Mean 242 Rule 5: Sell Options with Proper Duration until Expiration 244 Rule 6: Perform Additional Analysis in Order to Get a Feel for Market Direction 246 Rule 7: Attempt to Make Your Market 255 Conclusion 256 Glossary 259 Index 263
Foreword xi Preface xiii acknowledgments xvii Part I Introduction to Binary Options 1 Chapter 1 What are Binary Options? 3 On What Asset Classes Are Binary Options Available? 3 Binary Options vs. CBOE (Vanilla) Put/Call Options 10 Advantages/Disadvantages of Binary Options 13 Reasons to Trade Binary Options 14 Part II Binary Options theory 17 Chapter 2 What Does Binary Mean? 19 Components to a Binary Option 20 Long Trading 22 Short Trading 24 Chapter 3 Pricing 29 Strike Price 29 Time Value 30 Price as a Natural Market Consensus 32 Reading a Binary Option Chain 35 Part III Trading Binary Options 41 Chapter 4 Binary Options Contract Collateral 43 Margin and Debit Risk of Vanilla Options and Futures 43 Collateral Explained 44 Binary Options Expiration Values 44 Collateralizing a Long Trade 45 Collateralizing a Short Binary Options Trade 50 The Mechanics of a Binary Options Short Trade 50 Chapter 5 Settlement 59 Settlement on Binary Option Long Trades 59 Commissions and Fees 73 Chapter 6 Entering and Exiting Binary Option Trades 75 Reading Quotes 75 Reading an Order Ticket 76 Exiting Trades 78 Exiting Your Trade before Expiration 81 Chapter 7 Keys to Trading Binary Options and More Examples 95 Gold Binary Examples 96 Copper Binary Examples 99 Part IV Binary Options Trading Strategies 105 Chapter 8 Volatility Trading Explained 107 Taking a Volatility Long Position (Buying Volatility) 108 Regulating Success Probability and Payout with Strike Prices 111 Taking a Volatility Short Position (Selling Volatility) 113 Regulating Range and Payout with Strike Prices 116 Max Loss, Collateral, and Max Profit Summary Table 120 Chapter 9 Binary Option Behavior as Expiration Approaches 123 Understanding Delta 123 Delta and Price 127 Chapter 10 Technical Trading Strategies with Binary Options 129 Support and Resistance 130 Breakout Trading 135 Chapter 11 Fundamental Trading Strategies with Binary Options 139 News Releases 139 Political Events 144 Speculating on Actual News Releases 147 Economic Data Releases that You Can Speculate On 149 Part V Creating Your Binary Options Strategy 153 Chapter 12 Systems with Binary Options 155 Finding Your Edge 155 Proper Trading System Development 156 Back-Testing Binary Options Strategies 158 Three Back-Testing Rules 162 Chapter 13 Negative Emotions 165 Greed and Fear 166 How to Handle Negative Emotions 166 Find the Right System for You 168 Practical Steps to Mitigate the Negative Emotions 175 Chapter 14 Risk Management 183 The Process 184 Determining Position Size 185 Risk Management on Option Spreads 190 Relationship between Position Size and Trading Psychology 199 Handling Unexpected Market Volatility 199 Benefits of Binary Options on Trading Psychology 202 Discipline of Expiration 206 Part VI Managing Your Binary Options Account 209 Chapter 15 Proactive System Improvement 211 System Cutoffs 212 Drawdown 212 Consecutive Losing Trades 215 Reinvestment Rate 216 Diversification and Account Distribution 220 Intersystem Diversification 220 Account Breakdown 221 Part VII Profiting with Volatility 223 Chapter 16 The Volatility Short Trading Rules 225 Premium Collection 226 Rule 1: Cut Off Your Losing Trades 231 Rule 2: Collect Enough Premium 234 Rule 3: Sell Far Enough Away from Market Price 240 Rule 4: Use Underlying Instruments that Revert to the Mean 242 Rule 5: Sell Options with Proper Duration until Expiration 244 Rule 6: Perform Additional Analysis in Order to Get a Feel for Market Direction 246 Rule 7: Attempt to Make Your Market 255 Conclusion 256 Glossary 259 Index 263
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