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.
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 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.
Trading on Nadex involves risk, which may result in financial loss, and may not be appropriate for everyone. Any trading decisions that you may make are solely your responsibility. The information presented in this webinar is for informational and educational purposes only. The contents of this webinar are not an offer, or a solicitation of an offer, to buy or sell any particular financial instrument offered on Nadex. Past performance is not indicative of future results.