Every trader can use the great variety of strategies in his work. Having such a great deal of choice, almost anyone who wants to earn on the binary options can try his hands in this business and obtain a result. At the same time, both complicated and pretty simple strategies exist. For example, one of the fairly simple binary options’ trading strategies is the strategy of purchasing the Call option within the start or the continuation of the ascending trend.
Binary options strangle strategy: basics and essence of work
The binary options Strangle strategy is another one strategy that can’t be referred to the category of complicated strategies. At the same time, it is officially allowed in the markets. Its essence consists in a fact that a trader can buy reverse options Call and Put at the same time. And the expiration time of each option can be different. Such strategy allows minimizing risks in some degree, especially if a trader works with a tool that provides an opportunity of pre-scheduled sale of options with lesser reward.
The strategy’s name derives from the word Strangle that means to choke or to stifle. Of course, it may seem that this word is not appropriate for the strategy’s name. However, it is used anyway.
It is important to note that the best time for applying this strategy is when the heavy movement in the market is expected. For example, such time can come when the important macro statistics data are published. In order to use this strategy, a trader has to study the binary options’ macroeconomic calendar attentively and find out the time, when the certain important data are published. After this, it is necessary to buy the Put and the Call binary options 1 minute before these data are published. As you can see from the above mentioned, the strategy is very simple. A trader is also not required to analyze the current situation in the market or to use the binary options’ indicators.
As soon as a trader sees that the price has started to move in the certain direction, he can sell the loss-making option with the lesser losses and wait for an expiration of the profitable option. At the same time, in order to increase the potential profit, a trader can buy one more option to the direction of the market’s movement that has recently begun. It is necessary to note that if the two reverse options are bought, the resulting profit will be not so high because a broker will offer to buy the loss-making option from a trader at the broker’s favorable terms. But, despite this, returns from operations during such work will occur anyway.
Binary options Strangle strategy: additional opportunities
Furthermore, the binary options’ Strangle strategy can be used for the risk hedging. Despite the relatively small potential profit, a trader bears smaller risks, as if he had bought a binary option in the single direction. When trading binary options using this strategy, it is almost impossible to make the incorrect forecast. This is because when a trader buys binary options in both directions, he can expect either of two deals to be profitable, when the price moves in either of two directions.
In addition, any volume’s indicator can be used to work with this strategy. This important auxiliary tool won’t show a trader the market’s movement, but will indicate that the volumes in the market are increasing, and it means that the activity will start in the nearest time. As soon as it happens, a trader can use the binary options’ Strangle strategy or any other binary options strategy, which will be suitable in the particular situation.