FTSE 100 Trading Tips

Thursday, January 22nd, 2015

Thursday, January 22th, 2015 by Tim Lanoue

When it comes to trading indices online with binary options it can be exceptionally difficult to find a high success rate trading strategy which is why today we are going to cover some extremely effective tips on how to successfully trade the FTSE 100 Index with binary options. Almost every binary option broker offers this asset but I would be willing to stick my neck out there and say that maybe 5% of all binary option traders actually trade this often forgotten indice. These tips can be used by traders of all experience levels and I highly encourage to use these tips when trading the FTSE 100 with binary options.

Introduction to the FTSE 100 Index

For those of you not familiar with the FTSE 100 Index it is an asset that measures the performance of the Top 100 grossing companies on the LSE, otherwise known as the London Stock Exchange. However, when it comes to trading with binary options it is offered in a derivative form and sometimes known as the UK Index among various other binary option brokers.

Public Service Announcements

This is the number one factor to closely watch and take advantage of when considering to invest with the FTSE 100 with binary options. In order to closely observe public service announcements I would highly recommend watching the news on a consistent basis, follow an online financial portal like Google Finance or utilize other web-pages that offer live press releases to the public. Press releases that you should be aware of and keep an eye on would be UK Housing Data, UK Inflation Data, UK Gross Domest Product Values, UK Interest Rates, and the value of the Usd/Chf currency pair.

Quarterly UK Earnings

Just like with all countries, the gross earnings produced by that country has a significant effect on their markets. If the gross earnings of a country are poor you can probably comprehend that the markets are lower as well and vice versa for strong gross earnings. Keeping an eye on quarterly UK earnings is a great way to predict how the FTSE 100 may react.

Trading the FTSE 100 

Following those tips will be your guidelines to profiting online with binary options, when you see that the Quarterly UK Earnings are strong and bullish then you should place a long-term CALL investment and vice versa for poor earnings. When it comes to public service announcements it takes some time get use to in order to see how certain releases make the FTSE 100 react. If the release is announcing good information then it is safe to say that the FTSE 100 price will rise and vice versa for hurtful information.

Becoming a dynamic binary options trader can make a world of a difference for you if you get bored easy with trading the same asset day after day. Following these tips are extremely effective and only slightly time consuming and it more often than not pays off in the long run! If you guys have any questions, comments or suggestions please feel free to leave them below and Mike or I will get back to as soon as possible!

Who is Jarratt Davis?

Sunday, January 11th, 2015

Sunday, January 11th, 2015 by Michael Freeman 

 On my blog I mostly cover information on binary options trading but at times I get emails and comments from online traders who are interested to find a legitimate mentorship and/or signals provider for Retail Forex Trading. Unfortunately just like with binary options, in the Forex industry you will find countless of fake offers from unverified websites with a simple concept, designed to get your trust while providing you with little to no added value. Today I will introduce Jarratt Davis, a very popular figure in the Forex Industry and the World’s 2nd Best Forex Trader on the Barclay currency traders Index between 2008-2013!

In my search to find a legitimate mentor who deals with Forex I encountered lots of fake offers and many unregulated Forex brands. As an online trader you should have no doubt that finding a reliable mentor, signals service or a broker is not as simple as hiring a plumber… We’re dealing with a great potential to create a side income or a main income from a high-risk investment and neglectfully signing up with the first offer we encounter, without doing a lot of research, is a risk you can’t afford to take.

WATCH This Important Video: Everything you need to know about Jarratt Davis!!!

I will save you guys some research today and introduce Jarratt Davis, the head of Smile Global Management, one of the few FCA regulated Forex Traders and Fund Managers. In other words, Jarratt is basically regulated in the UK and can legally manage clients funds. As I mentioned above, Jarratt Davis is a verified trader and a very successful one. It’s important to note that Jarratt is also highly endorsed on ForexPeaceArmy.com which is a leading Forex forum/help center for online traders.

DukasCopy TV filmed in Geneva, Switzerland – Interview with Jarratt Davis 

On JarrattDavis.com you can find Jarratt’s blog and information on his comprehensive mentoring program which includes videos, signals, chat and other useful features. Now, besides the strong Endorsement by ForexPeaceArmy and the Proven Performance Results, you can also find Jarratt Davis featured on many authority forums and other authority websites including Bloomberg and the Wall Street Journal. Jarratt’s mentoring was created in order to help traders learn how to trade, manage risk properly and understand the concept and reasoning behind each trade unlike the average signals service.  The more you learn and the more you understand how to trade, the higher the chance you will succeed and retail Forex can yield high profits but it can also expose you to a very high risk, therefore if you are looking to trade seriously, stop wasting your time with unregulated brokers and fund managers. Trade with someone you can really trust! I strongly endorse Jarratt and I encourage everyone who is seeking to learn and trade Forex successfully to check out JarrattDavis.com.

jarratt-davis

I encourage you to share your feedback below this review if you have any experience trading with Jarratt or any questions regarding his mentoring and signals program. For more information on my recommended signals services and software for FX and Binary Options, visit my Binary Options Signals Page. Thank you for taking the time to read this review!

Binary Option Tips for Crude Oil Trading

Friday, January 9th, 2015

Friday, January 9th, 2015 by Tim Lanoue

When it comes to trading online with binary options I am often asked about trading strategies that concern currency pairs or high volume stocks. Seldom am I asked if I have any trading strategies regarding commodities and indices so of course I am short hand on those strategies so when I was asked if I had one for Crude Oil I hopelessly found myself without a Crude Oil strategy suitable for binary options. Which is why today we are going to be covering binary options tips on how to fundamentally trade Crude Oil.

For those of you who never thought about trading commodities and indices with binary options let me inform you now that you are missing out on great trading opportunities and potentially missing profits that you could have had otherwise. In order to better understand what drives the prices of oil and how we can effectively trade Crude Oil without having to open a charting solution follow the two tips below.

Follow Public Press Releases and Announcements

Paying special and close attention to public press releases will be your cornerstone for fundamentally trading Crude Oil. Following this simple tip can really pay off when it comes to trading binary options, I have won some huge investments just by following press releases. An example of a press release that we could trade would be as follows: Apple is coming out with the iPhone 7 in 36 hours and they are releasing a Press Release and holding a public announcement. Now more than likely than not the price of Apple will sky rocket and move in a bold bearish (upward) direction. So what we would do is place a few big investments with end-of-day expiry times and at the end of the day we will more than likely win our investment and profit huge. When I know a popular company, stock or commodity are holding a big press release that I know will impact in a certain direction I will place no less than 10% of my account balance per trade. This is an extremely aggressive approach and should be used with caution however more often than not it pays off greatly in the end. To follow press releases and announcements simply visit the following web-pages: http://news.yahoo.com/, https://www.google.com/finance, and http://www.state.gov/r/pa/prs/ps/.

oil trading

Know and Predict the Economic Value of Crude Oil

Statistically analyzing the value and price of Crude Oil is the last important tip that I have to offer. Following a financial portal such as Google Finance will be the backbone to this tip and will pay off largely in the end. In the picture below you see yellow boxes on our Google Finance web-page, within these yellow boxes are press releases, announcements and correlating commodities that help indicate to us the current condition of Crude Oil. In addition, if you scroll further down and look at the Sector Summaries then your ability to analyze the past performance of Crude Oil will be all available to you. This is extremely effective when predicting future trends and should be used on a daily basis.

Trading Crude Oil can be difficult at times but if you follow the tips above you should have no problem profiting largely with your investments. Make sure to keep an eye out for press releases while recording the opening and closing values of Crude Oil from previous days, this can help traders dictate the future medium-term trend of Crude Oil. If you guys have any questions, comments or suggestions please feel free to leave them below!

Money Making Tips for Scalpers

Friday, January 2nd, 2015

Friday, January 2nd,  by Sjay Bell

In Cowboy motion pictures, the saying scalping holds an evil significance. However, in the realm of financial trading, it is a trader method utilized by traders to skim profits from the monetary markets. The primary thought behind this trading method is for traders to place a trade and close it minutes of racking up a few pips in profit. In the event that we were to attract a similarity to this type of trading then it would be topping a basin off by trickle nourishing. In view of their prosperity rate traders can make thousands though at a moderate rate, while numerous brokers have a tendency to disfavor scalpers. While scalping is typically done by Forex traders, the same trading method can likewise be utilized in Binary Options trading.

Money Making Tips for Binary Options Scalpers

Scalping with Binary Options is really truly like scalping in Forex trading. The main principle distinction is that with Binary Options, the positions are lapsed automatically because of the expiry of the trade. While scalping in Forex trading obliges that the trader closes the position for under their own motives.

To scalp with Binary Options, traders need to utilize options with a short expiry time. Consequently, the best options to utilize for scalping would 60 second options. While more Binary Options brokers are putting forth 60 second options trades, it ought to be borne as a main priority that not all brokers offer this kind of trading. So check first if your broker provides this sort of exchange. In any case, when 60 second options are not accessible, 15 minutes and 30 minute Binary Options can likewise be used. An alternate approach to scalp is by utilizing Option Builder exchanges since Option Builder permits traders to determine the expiry time.

pip-and-run

When you have chosen the time frame that you need to exchange, the following step is to decide the tools that you require before choosing to enter a trade. Typically, the tools utilized by scalpers incorporate candlestick charts, price action examination and technical indicators/ Chart pattern examination is not suitable as the analysis may yield the wrong analysis because of the more drawn out time frame needed. Only outlines with a base time frame of 1 minute and a most maximum of 15 minutes ought to be utilized on the off chance that you need to utilize scalping techniques. The principle explanation behind this is so any data acquired from your examination of the chart stays applicable. You would prefer not to break down a 6 hour chart for a trade that is going to play out in only 60 seconds. Everything sounds really simple however recollect that scalping is profoundly speculative. Practice regularly and make sure that you realize what you are doing before you choose to begin scalping! It’s an actuality that unpracticed traders wind up with a greater number of misfortunes than wins.

I hope you all found this very beneficial. Feel free to comment about any questions and concerns. Be sure to check out our articles for more beneficial information. Cheers!

Just added on BinaryoptionsChannel.com recommeneded signals networks! Check out ZuluTrade.com the largest social network for binary options and traders seeking to follow other traders based on real, live results! Join the fastest growing online trading social network ZuluTrade!

Binary Options Fence Strategy

Friday, December 26th, 2014

Friday, December 26th, 2014 by Sjay Bell

How’s it going fellow Binary Options traders? Hope you all are enjoying the holidays and are making money! Today, I want to share an awesome technique that practically any trader can utilize to maximize their profits, while decreasing as much risk as possible. This technique is known as The Fence Technique and it is highly effective. Therefore, those of you who are interested in improving your trading, continue reading along!

The Binary Options Fence Strategy and technique is intended to help us minimize the danger of investing through the utilization of Binary Options. Essentially, the technique obliges the buy of two options contracts on the same security. This is on the grounds that the trader needs to cover both sides of the market. Subsequently, he purchases both “Above” and “Below” contracts to “fence” in the costs of the security in the middle of the strike costs of these two contracts. With this methodology, the trader has the capacity lessen his speculation danger furthermore benefit from the market even without truly needing to predict the direction that the market is heading in.

For instance, an underlying security is quickly exchanging at $20. You determine that the cost of the security will appreciate within the following 10 minutes and along these lines purchase an “Above” contract for $1000 to lapse in 30 minutes. At first, the market moves in your favor until unforeseen occasions reason costs to fall. On the off chance that the trader does nothing, the value of his investment will begin to depreciate and the trade will lapse out of the money. But, with the fencing technique, the trader can prevent this devastating situation and secure his profits.

fence strategy

Let’s say the trader buys a “Below” contract for $1000 when the cost was exchanging at $25 in the wake of dropping from the top of $38 simply a couple of minutes prior. Assuming the payout is 85%, and the expiration cost of the security is in the middle of $20 and $25, the trader will have the capacity to collect on both contracts gaining an total benefit of $1700 ($850 + $850).

In the event that the close cost lapses ABOVE $25, then the “Above” contract is in the money while the “Below” contract is out of the money. Nonetheless, if the close cost lapses BELOW $25, then the “Above” contract is out the money while the “Below” contract is in of the money. In either case, the traders misfortunes are topped at $150 as the $850 benefit from either contract will help lessen the loss of the $1000 speculation capital.

The fundamental threat of the Binary Options Fence Strategy is the point at which the expiration cost is underneath $20 on the “Above” contract and higher than $25 for the “Below” contract since both contracts lapse at distinctive times (The “Below” contract is purchased after the “Above” contract). In such a situation, the trader will lose all his venture capital of $2000. To stay away from such a situation, the trader must guarantee that his forecast is right on the money. The Fence technique is a straightforward and great technique to adopt when the conditions in the market are suitable for its usage. Therefore, the technique obliges traders to have some average foundation learning about the market in place for its effective usage.

Read more on Fence Trading – Mike’s Binary Options Fence + Bollinger Bands Strategy! 

Binary Options DisputeZone

Thursday, December 25th, 2014

Thursday, December 25th, 2014 by Tim Lanoue

anyoption

Many of us have had the unpleasant experience of being taken advantage of or scammed by an unregulated binary options broker.  With that being said many of you also probably know what it feels like to think that you are absolutely alone, maybe thinking that you have no hope in getting your hard-earned money back but I am here today to tell you I know exactly how you feel.  When I first started out in the adventurous industry that is binary options I was taken advantage of, scammed, heart-broken and completely devastated.  I put my last penny into a binary options broker hoping and dreaming of a better life for myself only to be taken advantage yet again.  It wasn’t until a few months later that I took responsibility for my own actions and took it upon myself to learn the industry and become a better trader and person.  But I am not here today to talk about myself, told I am here to talk about a 3rd party organization created by the one and only Michael Freeman known as DisputeZone.  No longer do you have to feel worried about not getting your money back or feeling alone thanks to www.DisputeZone.ORG.

 

 

DisputeZone’s Mission

The main reason why DisputeZone was created was so that traders who have been taken advantage of actually have a chance of receiving their hard-earned money back.  Due to the exponentially growing number of complaints involving binary options and Forex brokers an organization needed to rise to the test and take a stand against these binary option brokers.  The establishment of such an organization has been needed in the binary options community and now everyone has a voice in numbers that can be heard.  Thanks to DisputeZone.ORG you no longer have to feel alone and maybe, just maybe, if we all work together we can help lower the number of people who fall victim to fraud.

 Get ready for some Texas Justice by Michael Freeman ;)

gunpicture

 

DisputeZone’s Claims and Support

All claims and meditation services required on DisputeZone are completely free during the BETA phase for all claims that fall under $1,000.  This is subject to change and in order to place a claim with DisputeZone you must make atleast a $25 minimum donation to one or more of the following charities that follows:

syrianorphans.orgalittle4alot.com, worldwidecancerresearch.org/donate, & support.woundedwarriorproject.org.

Once a donation has been made please forward to receipt to support@disputezone.org and then submit your complaint.  You can contact DisputeZone support staff by submitting a complaint form and within 24 hours you should hear back from them, after DisputeZone’s BETA phase Premium support will be made available.  Not only are we are making a difference for those of us who have fallen victim but also for thousands of others all around the world.

Thanks to www.disputezone.org you no longer have to feel alone and cheated.  If we all work together and empower this organization there is no reason why we shouldn’t be able to get back what we have lost.  Let’s take a stand for what we have lost and make a difference so less people can fall victim to fraud within the binary options and Forex community.  Thanks for taking time out of your busy day and I hope to see you guys on the inside.

Managing Your Binary Options Account

Friday, December 19th, 2014

Friday, December 19th, 2014 by Michael Freeman 

Perhaps one of the least mentioned areas when it comes to trading online with binary options would be proper account management and risk prevention. Some of you wouldn’t believe the number of emails I receive on a weekly basis concerning trading strategies and broker reviews but hardly do I ever receive emails concerning proper management techniques with binary options. Today we are going to focus on a little risk prevention and talk about the two styles account management that should be applied when trading online with binary options.

Passive Binary Options Account Management

Passive account management is the best style of account managing when you are just making your first splash in the binary options industry. Passive binary options account management is also great if you are a strategy guru and like to test new trading strategies, with passive account management you only invest a maximum of 5% of your capital per trade and a maximum of 15% all at one time. Meaning that you can invest a max of 3 trades all consisting of 5% of your capital with a maximum of 15% total all at one time. No more trades can be placed until one of your other trades expire first, remember, this is the passive and most reliable style of account managing. Many novice traders join the industry thinking that it is going to be a cake walk and they are going to make hundreds if not thousands per week but little do they know this industry is one of the most difficult trading industries to be successful in.

account management

Aggressive Binary Options Account Management

Aggressive account management is a form of management that I strongly feel like should only be applied by experienced traders. Aggressive binary options account management is simply doubling the values we use with Passive account management. Meaning that you can only invest a maximum of 10% of your capital per trade with a maximum limit of 30% invested at any given moment. If more than 30% of your funds are out at any given moment I would classify that as overtrading and that should never happen, overtrading is a trader’s worst nightmare. Although this style of account management is not recommended by most I tend to solely use this management style and have seen nothing but amazing, big profit results.

When it comes to trading online with binary options it pays off in the long run to properly manage your trading account. Statically if I would have to guess 6 out of every 10 trades blow through atleast two broker accounts before changing their risk management techniques along with game plan. Before investing with any binary options broker, ask yourself, “What style of account managing should I utilize and what three trading strategies should I be using in order to harvest the maximum and best trading signals?” Keep in mind that binary options is a lot like a marathon, not a sprint. Take your time and constantly stay hungry for learning new breakthroughs that could help your ability to profit more with online trading. If you have any questions or comments regarding this article please feel free to leave them below and I will get back to you as soon as possible!

Learn more about my Recommended Binary Options Signals including my own Manual Signals Group which enables you to follow my trades via email and text.  If you are interested in Auto Trading: visit Mike’s Auto Trader.

 

Bearish Harami Patterns

Wednesday, December 17th, 2014

Wednesday, December 17th, 2014 by Tim Lanoue

As I mentioned in my previous article I am back with the Bearish Harami trading strategy. Now I am not sure if you guys have had the time to test out the Bullish Harami pattern like I have myself but I have been noticing some great results, actually a 73% success rate to be straightforward. Anyway guys, let’s take some time out of our day and learn a little bit about bearish harami patterns and how we can incorporate them when trading online with binary options.

As with any binary options strategy it is absolutely imperative that we have the proper set up before placing any investments. I have started receiving a large amount of emails since I started my own binary options channels about everything that you could imagine related to binary options. Anyway guys, 9 out of every 10 emails concerning a problem with trading strategies often are resolved after fixing a set up issue concerning a trading strategy. Many novice and experienced traders are so anxious to get started with binary options and to use a high success rate trading strategy that they look over the most simplistic step, which is the set up. They may be using the wrong time frame, trading the wrong asset, trading during the wrong hours or whatever the issue may it can always be fixed and what I am preaching to you guys reading this, make sure to set up your trading strategy correctly please, otherwise your results may not be quite like you are hoping.

bull_market

Anyway guys, back to it, when setting up this trading strategy we are setting it up just like the Bullish Harami trading strategy which I discussed in a previous trading article. Meaning that we need access to a charting solution, my favorite charting solution to use would be www.freestockcharts.com due to the large variety of assets and indicators to choose from. Next, we need a reliable asset to invest with, meaning that it needs to be a low volatility currency pair, high volume stock or popularized commodity. The following list are assets that I suggest to try when using this trading strategy: Eur/Usd, Aud/Usd, Usd/Chf, Usd/Cad, Apple, Exxon, Microsoft, Twitter, Facebook, Nike, Gold, Oil or Silver. The next step to our setup is to make sure that the time frame that we are analyzing our asset is set to a period of 15 minutes and preferably during market hours, like the New York trading session for example.

Now that we have the proper setup established we can work on trading bearish harami patterns. In the first picture below you can see an example of how we use this trading strategy, unlike the Bullish Harami trading strategy where we needed three steps in order to place an investment we only need one step to occur. This step would be for a bearish candle to reside completely within the vertical portion of the previous candle, however, this bearish candle must be within a bullish candle completely. Basically meaning that we need a bearish candle to reside completely within the limits of the previous bullish candle. In the pictures below you can see examples and how all of our investments ended up as winners. When placing an investment with this strategy it is imperative to keep your expiry times within 15 to 30 minutes, no shorter nor longer or else this trading strategy won’t work quite like the way it is suppose it.

Using Bearish Harami Patterns when using technical analysis oriented trading strategies is extremely effective and should be practice on a daily basis. The best advantage about these harami patterns is that they require the use of no indicators, meaning that it depends entirely on Price Action trading strategy, which is more than likely why these strategies have such a high success rate. If you guys have any questions, comments or suggestions please feel free to leave them below and I will get back to you soon! Thanks guys and hope you have a great and profitable trading week!

Shooting Star Strategy

Monday, December 15th, 2014

Monday, December 15th, 2014 by Tim Lanoue

anyoption

Hey everyone it is your favorite binary options blogger here back with a somewhat traditional binary options trading strategy that you may or may not have heard of before. Today we are going to cover a binary options trading strategy known as the Shooting Star, it actually feels weird to submit a strategic article for you guys that I haven’t composed on my own but in all honesty this is one of the those binary options trading strategies that should not be forgotten and should be utilized when trading binary options.

For those of you who are unfamiliar with the Shooting Star strategy it is a relatively simple trading strategy that can easily be used by traders of all experience levels, meaning novice and experienced traders would both benefit by learning and using this trading strategy. The main purpose of this trading strategy is to trade what is known as a reversal. For those of who not familiar with reversals they are exactly what they sound like they are, they are reversals that take place in the market.

The whole function of this trading strategy is to help traders predict when the price action of our targeted assets is going to conduct a reversal. Meaning that it will change directions and go the other way. This is relatively simply and straight up, one of the best advantages about this trading strategy is that it can be used by all assets. Meaning it doesn’t matter if we use a currency pair, stock, commodity or indice. However, when it comes to trading online with binary options I tend to trade only certain times and only certain assets if possible, below I will discuss my set up for using this trading strategy and how to implement it.

Before we dig deeper into the strategy portion, it is important to understand that with any binary options trading strategy you are more likely to find better success if you trade during market hours with a market hour trading strategy. The shooting star is a market hour oriented trading strategy and should not be used during intra-trading hours. When using this trading strategy or any other trading strategy you guys may have noticed that I tend to stick with only a handful of assets depending on their type. For example, I tend to only trade low volatility currency pairs, high volume stocks or highly popularized commodities. Rarely do I trade more than 6 different assets a week, it all depends on the trading strategy that I am using and the current market conditions. Moving forward, when using this trading strategy I would highly recommend using an asset from the following list: Eur/Usd, Usd/Cad, Usd/Chf, Nzd/Usd, Apple, Exxon, Facebook, Twitter, Gold, Silver, and Oil. Once you have chosen your asset then we are good to finish setting up our charting solution. The charting solution that I use is a web-based charting solution known as www.freestockcharts.com, for those of you not familiar with www.freestockcharts.com it is the best charting solution in my opinion and offers free access to all the indicators that I need.

In the picture above you can see an example of how this trading strategy would work. As you can see that the time frame that we use is Daily, meaning each Japanese Candle stick represents a time period of one day. The Shooting Star trading strategy is a strategy that is meant to take place over a period of two days, where the second day is the indicator of our reversal. As you can see in the picture we have four example of how this trading strategy would work. The first thing we need is a bullish candle by itself and then a bearish candle right next to it. The second candle is known as the origin where the shooting star takes it reversal. As you can see after the second candle we had a following bearish candle after, confirming that the trend did indeed reverse and our trades ended up in-the-money.
The Shooting Star trading strategy is a classic binary options trading strategy that should be used more often and not forgotten. Average expiry times that you should use when using this trading strategy should be 4 hours to End-Of-Day expiries, meaning the option will expiry at the last available time during market hours. As always guys if you have any questions, suggestions or comments please feel free to leave them below and I will get back to you as soon as possible!

Check out the BinaryoptionsChannel.com Extended Binary Options Indicators Explained List!

Covered Call Technique

Thursday, December 11th, 2014

Thursday, December 11th, 2014 by Sjay Bell

A great technique of reducing your risk is the utilization of the covered call technique. This procedure is particularly utilized in a circumstance when you are holding a long market position in a security. So as to lessen the risk in this circumstance, you can compose (sell) a call option on that security. The thought of this is to produce additional gains (option’s premium) from the security exchanged by selling the option down the road. An accidental advantage of this procedure is that you likewise get to minimize the degree of your misfortunes if the market abruptly tanked.

If you want to fully comprehend the idea of the Covered call technique, it is paramount to have some essential learning about what options are. Options are basically financial contracts that give the holder of the option the ability to buy or sell a specific security at a particular strike price prior to the date or time which the option will lapse. It ought to be noted that the option does not oblige the holder to practice these rights.

With a Call Option, the holder of the option gets to purchase a security at the expressed strike cost prior to its expiry. Let’s say that you unequivocally believe that the USD/JPY exchanging at 98.20 will climb higher in the short term. You can benefit from this ascent by obtaining a close term USD/JPY Call Option that permits you to purchase the USD/JPY at the current rate of 98.20. In the occasion the USD/JPY does climb higher to say 115.00, exercising the call option will permit you to benefit from the exchange rate differential, for this situation 16.8 yen (115.00 -98.20). Assuming the foreseen climb in the USD/JPY did not happen, for this situation, you can decide not to practice the call option. Your misfortune will then be recently constrained to the premium that you paid for the close term USD/JPY Call option.

In the above case, we examined about how call options work. On the opposite side of the comparison, there is likewise the seller of the option who accepts boundless risk. Consequently when you as a speculator turn into an option seller, you will really be accepting a boundless level of risk particularly in “naked call” situations. A “naked call” is characterized as an issue where a trader sells an option without owning the fundamental security for the option.

By “naked call” we are not referring to the picture below :) 

(Content was removed on Facebook so I decided to just remove it entirely..it was just a joke.)

To moderate your degree of risk, the covered call technique can be utilized. Generally, a covered call procedure requires the trader to own the underlying asset so the call option is secured or covered by genuine responsibility of the security. Hence, in the occasion the makes acts against you and the call option gets utilized, you are hedged against boundless misfortunes.

At this stage, you may be asking why try managing covered call options and not simply bargain in the underlying asset only. Well the thing is with covered call options, regardless of the fact that the options that you sold get practiced constraining you to sell the underlying security at the strike value, you will at present get to win the premium from the option sold.

For instance, how about we say you possess a few lots of USD/JPY. You chose to sell call options for the USD/JPY for a premium of 50 cents with a strike cost of 110.00 while it is even now exchanging at 98.00. So if the USD/JPY doesn’t move past 110.00, you will have earned the premium of 50 cents from the options sold. Be that as it may, if the USD/JPY moves past 110.00 (the strike value), then you will be compelled to sell the USD/JPY at 110.00 to the holder of the call options. As should be obvious in this situation, risk is moderated as you officially possessed USD/JPY and you likewise get to win extra wage (premium) from the options sold.

In spite of the fact that the covered call procedure can be very much a complex methodology, nonetheless it is a decent method to utilize when you need to:

  • Earn a premium from selling a call to accept the commitment of selling an underlying asset at a specific cost.
  • Take gains just at a level which is over the current value level.
  • Forsake the upside benefit potential in exchange for some drawback assurance.

I hope you all found this very beneficial. Feel free to comment about any questions and concerns. Be sure to check out our articles for more beneficial information. Cheers!