Technical analysis

Planning binary options successful strategies using technical analysis:

Technical analysis offered on various stocks is a treasure-trove of information and full of strategies that can be used is a successful binary options trader. It’s loaded with well researched technical indicators and tools that will come handy in binary options trade.

It usually consist of day to day analysis of all the basic fundamentals of big-time companies and stocks options coupled with close monitoring of market’s direction and giving a straight forward report of when to expect a rapid change for better or worse, what is the time frame, when to enter the trade and when to exit.  In other words it’s a forecasting system for binary options trade based on probability theory that a trader may rely on to devise his own binary options strategy.

Binary options strategies are derived using tools like technical analysis which asses the prices and flow of stocks using numerical data, figures and charts generated by the trading activity.  This assessment borders on the assumptions that assets follow the same trends and the trends tend to be repetitive. One popular binary options strategy is buying both call and put options on an asset of interest. For example you are trading on an asset whose stock price is valued at 100$.

You believe that it may rise beyond 140 $ in next 4 hours, so you place a call option on strike value of 100$ with 80% return on success and 10% on failure. If you have a feeling that the stock will not rise any further after 4 hours and may decline you place a put option on price value 140$ with same return vale as call options. Your investment on both options should be identical say 100$. Now there are three possible out comes:

a)  Stock expires between 100-140$ Both options are successful, your collective return is 160$, total gain is 360$

b) Stock expires above 140$ Call option: in the money; return is 180$ Put option: out of the money; return at 10% is 10$; Total money invested is 200$, money gained is 190$, loss is 10$.

c) Stock expires below 100$ Call option end out of money; return is only 10$ Put option ends in the money; return is 180$ Total money invested is 200$, money gained is 190$, loss is 10$.


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