Classic binary options are perhaps the most popular contracts’ types. Trading it is fairly easy. You have to only determine the direction of the underlying asset’s market movement. Two types of the digital options exist: Put and Call. In this article we will consider the Call option.
What is call option?
If a trader assumes that the underlying asset’s price will grow, he will buy the Call option. In the Forex terms, he opens a long position in the market.
What can be used as a reason for buying of this option? Firstly, the ascending trend. It is the most popular situation when traders buy the binary Call options. But there are other cases too. If the descending trend’s reversal in the market starts, a trader may want to buy this type of option too. However, it this case it is desirable to have a proof of the trend’s reversal and only then a trader can buy the Call option.
Furthermore, if the underlying asset’s price is near the important levels and a trader assumes that the levels will be broken above, he can buy the Call option. As in the previous case, it desirable to wait until the breaking, and only then buy a contract.
What analytic methods can be used for Call option buying?
In order to buy this type of option, different analytic methods can be used. Recommending buying the Call option within the ascending trend is very simple. But is it simple to determine, whether the market’s trend is really ascending?
It can be done in many ways. For example, one of them is the trend’s indicator. Using this uncomplicated tool you can determine what the mood in the market is. There are many trends’ indicators. The moving averages are the most popular among them. If these lines on a chart are directed up, the market has the bullish trend established. In this case, a trader can buy the Call option.
But it is not the only one indicator that can show what the current direction in the market is. Any oscillator can be used for this purpose too. However, it is necessary to understand that an oscillator will rather show reverse. For this reason, the binary Call option has to be bought only when an oscillator shows that the market is ready to change the direction after the descending movement. Serious supposition for the buying of this option’s type is a situation when the indicator-oscillator is in the oversold zone.
In addition, it is recommended to buy the Call options in those cases when there is an impulse for the price to move up after the formation of the certain pattern on a chart. For example, if a triangle had formed and the price broke out its top borderline, a trader can buy the Call option because the movement upwards will continue for some time.
Another one cause to buy this option is the improvement of the economic status of a state currency asset of which is traded by a trader. In this case, market’s mood will be positive and the currency will start to grow. Therefore, it is an excellent opportunity to make money on its growth.
The Call option can be bought in the abovementioned cases and in many other cases. This is for the reason it is one of the most popular contracts’ types in the binary options’ market. For this reason, whenever a trader sees that there will be an ascending movement in the market, he can buy the Call option confidently.