A Market Is Always Open with Binary Options

A Market Is Always Open with Binary Options

Many traders who work a separate job during prime market hours find it discouraging to miss daily moves made by trading instruments. However, a market is almost always open somewhere, and with binary options, traders can find an opportunity to capitalize on market moves even during the night hours.

A Market Is Always Open with Binary Options
A Market Is Always Open with Binary Options Getty Images

It’s Monday night here in the United States, just after 8:00 pm EST.  Traders who have just gotten home from work at this hour know the regular session for the U.S. equity indices is closed.  However, the primary index market in China is just opening for Tuesday at this time.

During the prior day’s session on Monday, the markets in Shanghai were sharply lower by about 2.5%; and in the current session, a key piece of economic news is about to be released, headlined by Industrial Production.

Traders’ views may differ on the direction the market will take based on this news release.  With the lower momentum created on Monday, some traders may think that the China A50 will continue lower.  Of course, every market has two sides, and other traders may believe that this news presents a perfect dip buying opportunity.

Additionally, choosing a market view is not always as simple as expecting the market to go higher or lower – often times, markets trade in ranges as well.

Whether you have a directional view, or a directional neutral bias, believing that the Shanghai market will be range-bound, there is a strategy for you with binary options.

The table below lists the daily binary options offered on the China A50 Index Futures.  These options will expire at 2:55 a.m. EST at the end of Tuesday’s trading session.  Each one of these binary options has a $100 value per contract.  

A Market Is Always Open with Binary Options

A trader purchasing binary options expect a futures settlement above the options’ strike price; traders selling binary options expect a market settlement below the strike at expiration.

When buying a binary option, the risk is the purchase amount, while the potential reward is the difference between the purchase price and the $100 contract value. When selling a binary option, the selling price is the potential profit, while the risk would be the difference between that trade price and the $100 value.

For example, let’s say you are bullish the China A50 index, which is currently trading at 10.421.  In that scenario, you could buy the 10,430 strike for $50.50, risking that amount to make $49.40 if the trade is successful and settles above 10,430 at the day’s session close. Alternatively, if your view is bearish, you could sell the 10,410 strike at 49.25, risking $50.75 to potentially earn $49.25 if this market closes the session at or below 10,410 strike level.

Binary options provide multiple opportunities to trade various index markets including the China A50 at various times around the globe.  Please keep in mind that these examples are not trading recommendations, but intended to demonstrate how binary trading offer a range of ways to increase any trader’s edge.

 

Note: Exchange fees not included in calculations.

The information contained above may have been prepared by independent third parties contracted by Nadex. In addition to the disclaimer below, the material on this page is for informational and educational purposes only and should not be considered an offer or solicitation to buy or sell any financial instrument on Nadex or elsewhere. Please note, exchange fees may not be included in all examples provided. View the current Nadex fee schedule. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representations or warranties are given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk and any trading decisions that you make are solely your responsibility Trading on Nadex involves financial risk and may not be appropriate for all investors. Past performance is not necessarily indicative of future results. Nadex instruments include forex, stock indexes, commodity futures, and economic events.

Nadex binary options and spreads can be volatile and investors risk losing their investment on any given transaction. However, the limited-risk nature of Nadex contracts ensures investors cannot lose more than the cost to enter the transaction. Nadex is subject to U.S. regulatory oversight by the CFTC.