How To Add Binary Options To Your Portfolio

Exchange traded binary options are fairly new to the market. They were just approved for listing by the SEC in 2008. In May of that year they were launched by the American Stock Exchange and in June the CBOE followed suit. Since that time they have continued to gain in popularity.

Let’s touch on a few binary option strategies you should know about.

Without any knowledge of strategies that are often applied and used in this industry, you will have a very slim chance of succeeding. However, if you will work on these strategies then you will have a good chance of ongoing binary option trading success. Below are a few of those strategies that you must learn and use in binary trading.

Hedging Strategy

This is one of the basic binary option strategies. In this strategy you lock in profit on your stocks or some other type of trade you may have on the board with your Wall Street broker. For this strategy, you might look for a longer term binary contract such as a weekly option.

You can also use the hourly binary options to hedge your short term trades, such and emini index trades, hedged by a binary option on the same index or futures contract. In some cases you may hit on both the trade, and the option!


In this strategy, you buy both the put and the call on the same security. In this case if at the end of expiration time the price is in between the put and call price, you still profit on both of them. This is also known as a spread trade. Binary options make this fairly easy to do.

Reversal Trading

This is one of the most commonly used binary option strategies. When you find a big move on any specific stock, you go ahead and buy a binary option but that binary option is in opposite direction of that move.

For instance, if there is a huge move up, you wait until the move seems to have reached it’s peak, and you buy a put option for the retrace back down. This strategy works best closer to expiration time of the binary option.

Double Trade

This is another often used strategy form the legacy of binary option strategies. If you see that a trade is moving in your favor and you are in the money, then you can go one step ahead and buy another option so that you can make more profit.

This is more of an advanced move, and not recommended for beginning traders.

Whatever you do, find strategies that you know and understand. Combine those with good money management, and there is no end to what you can do with binary options.

Go to Idea Marketers for the entire story

Option Trading Secrets

Leave a Reply

Your email address will not be published.


This site uses Akismet to reduce spam. Learn how your comment data is processed.