In the United States, traders are experiencing growing interest in Asian equity index markets, including the Nikkei 225, Japan’s benchmark, and China’s A50 index. However, traders may have a challenging time finding a suitable regulated product in the U.S. that allows the opportunity to engage in these markets.
Traders in the U.S. can either trade with a broker that clears overseas exchanges, or can trade futures exchanges in the U.S. that offer products based on the Asian indexes. With the latter option, opportunities are limited because although there are futures in the U.S. on the A50 index, they trade less than 100 contracts a day with no options; therefore, this instrument is not practical. There is also a futures market in the U.S. for the Nikkei futures, but its options are also not very liquid; and when trading the future contract outright, each tick value is about $25.00, which many small-volume traders may find too risky.
However, there is another option for U.S.-based trades of Asian markets. Binary options regulated by the CFTC offer options based on both the Nikkei 225 and China’s A50 index futures. Binaries provide traders an opportunity to trade these indices during the Asian session, and offer expirations on an hourly, daily and even weekly basis. These binary options are based on a $100 maximum value per contract, so the risk on any trade is never more than that $100 amount, and can be quite a bit smaller depending on the type of strategy used. Many traders will use these options outright, but some will trade “straddles” and others will use “short strangles.” Meanwhile, other traders will craft their own specific strategies that fit their unique market views.
The CFTC-regulated binary options exchange also offers spreads. Binary option spreads are another unique way of trading the Asian markets with a built-in floor and ceiling price involving limited and defined risk, allowing the trader to use an instrument that closely tracks the price move of the underlying futures contract.
If you are looking for a risk-controlled way to take advantage of the Asian equity index markets, then binary options maybe the answer for you. Many traders are finding that binary trading is the way of the future, giving traders methods to profit in today’s markets with today’s options, making binary trading one of the fastest growing movements in the U.S. and around the world.
Note: Exchange fees not included in calculations.
Futures, options and swaps trading involve risk and may not be appropriate for all investors. Past performance is not necessarily indicative of future results.