Professional binary options traders typically adopt different trading strategies. They usually have more than five methods in their repertoire.
This reality is even though these professional binary options traders would often implement only a few techniques at any given time. We want to share this educational article with our readers regarding the top three trading strategies professional binary options traders use to thrive in the options market.
We believe this informative discussion will surely help them in their trading activities. Based on the educational article posted online by Montreal, Canada-based English news and media website Montreal Times, successful professional binary options traders typically stick to a specific trading strategy.
They have improved trading knowledge, tools, and mindset, and are prepared to involve themselves in the high-risk and high-reward trading activity.
Professional binary options traders understand the fundamental trading strategies and risk management models, resulting in their successful careers.
They already identified their strengths and maximized the trading opportunities resulting in their selection of the trading method suitable for them. The following are the three best trading techniques most professional binary options traders apply:
- BEAR PUT SPREAD
The Bear Put Spread strategy is similar to the Bull Call Spread strategy. However, in this technique, the binary options trader sells the same number of puts at a lower strike price this time.
When both assets bought have the same expiration date is when it only qualifies as a Bear Put Spread. Professional binary options traders typically employ this method when they expect a price decline and are bearish on the underlying asset.
The Bear Put Spread strategy’s primary purpose is to help the binary options trader mitigate any potential loss from the trade. Nevertheless, it also restricts the number of profits made if the trade was an outright put.
- BULL CALL SPREAD
The Bull Call Spread strategy is executed when a binary options trader purchases calls at a certain strike price. It is also done when the trader sells the same number of calls at a higher strike price at the same time, with both call options possessing the same expiration date.
Professional binary options traders usually perform the Bull Call Spread strategy when they are upbeat about the underlying asset and desire to control the net premium spent in entering a direct long call on the asset.
Nonetheless, the Bull Call Spread strategy comes with a flaw. The binary options trader is not exposed to immense profits if the asset does an extended bull run, unlike an outright long call option. Instead, he selects to mitigate the expenses of holding an outright call option.
- LONG STRADDLE
When an impulsive price leg is expected, professional binary options traders employ the Long Straddle strategy. Still, there is uncertainty concerning the underlying asset’s ultimate direction.
The binary options trader places a call here and puts an option on the asset with the same expiration date and strike price. Additionally, in theory, the Long Straddle strategy permits investors to participate in the next impulsive price swing.
This fact is while they have a loss controlled by the cost of both call and put contracts. The Long Straddle strategy is quite popular among high-risk takers because this technique enables unlimited gains from the underlying asset, such as an outright call or put option.
We recommend our readers trading binary options to study these three strategies professional binary options traders use.
We believe mastering these techniques by heart can help them, especially if they are looking to build a profitable options trading career as professional binary options traders.