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  1. #1
    Administrator Martin Kay's Avatar

    Hedging With Binary One Touch Options !!!

    Hi, guys! I want to present you the new trading review by Michael Hodges, which will open for you the world of hedging! Michael has prepared detailed study on the so called One Touch Hedging Strategy, one of the most important strategies, which is used very often to reduce risks and increase profits in binary options trading. Read it and you will learn a lot!

    Originally posted by M. Hodges Click here for the full strategy review.

    One Touch options are a high yield investment vehicle created by the binary options trading community. The One Touch options deliver some of the highest returns but also come with some of the highest risk. One touch options, at least the ones offered by Anyoption, are weekly expiry options you buy over the weekend. Even though the options only require “one touch” to be profitable this really means that the options have to close at or past the strike level at least once during the week. If, during the course of the week, the option closes at or past the strike level you receive the maximum payout, if not you lose the entire investment.

    What is hedging?
    Hedging is a technique and strategy that traders use to offset potential losses. In commodity trading businesses and individuals use futures contracts to hedge against sharp increases or decreases in the prices of raw materials. In stock trading investors may hedge using options or some other derivative instrument. With One Touch options I recommend using another binary option as a hedge. By doing this you can greatly reduce the potential losses associated with the trade and enhance potential returns.

    The Final Conclusion

    My final word…One Touch options hedging is a strategy that I will be using. I think it will be best deployed when the markets are trending strongly. When the markets are range bound or otherwise hindered there are other techniques with better risk reward profiles.

  2. #2
    Specialist Member RCox's Avatar
    The ability of options strategies to help limit risk through hedging is one of the most often neglected positives of these types of trading instruments. This is even the case for people without a direct interest in trading binary options by themselves. If, for example, a spot trader wanted to prevent some of the potential risk, options can be used where more traditional stop losses might be placed. This helps to prevent against price gaps in less stable markets and might be highly preferable depending on the relative liquidity of the asset that is being traded. So, this would be especially true if a small cap stock or a rare commodity or currency is the main focus. Other types of trading opens up investors to all sorts of inefficiencies in the market but since an options contract gives the trader the "right" to buy or sell an asset at a certain price, a lot of these risks are removed.

  3. #3
    M.J is offline
    Veteran Member M.J's Avatar
    Hedging is always a great risk management technique.
    And I agree with RCox that even though it is very effective, it is not very popular method. Michael explained it nicely. I also thought about Why it does suck but cant think of any BIG disadvantage.

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