The Risk Reversal Strategy

The Risk Reversal Strategy

risk-free

 

There is a tricky little technique for manipulating Risk Free Trades with Binary Options that is fool-proof. Ready?

Here’s what to do…

First purchase two options of the same asset with identical expiry times, and moving in different directions. Next a Call Option will be taken with the presumption that an asset will rise. Then another option, a Put Option, will be taken with the presumption the asset’s price will fall.

You’re essentially covering both trades, one will win and one will lose; but since the trades are risk free, the losing trade will not go against your personal account. This strategy is literally fool-proof.

Basic Information:

The majority of Binary Options Brokers have a standard set of rules which allow Binary Options day traders to sell an option prior to the expiry time using the Option+ mode.

The technique of purchasing a Call Option and simultaneously purchasing the same asset with a Put Option is also known as a Risk Reversal Strategy. This trading strategy is used after you have tracked the behavior of an asset and then purchased that asset at the moment you feel confident in which direction the price will move. As the assets moves and it becomes clear there are strong directional trends, you immediately sell the option that is moving the opposite way. The faster you unload the failing option, the less money you lose. Losses tend to range between 10-25%, and any loss that is higher than that will most likely be offset from the profits you earn from the successful option.

All you have to wait for is the opposite option to expire to receive your winning shares from the profitable trade. Binary Options Brokers tend to have pay-out rates as high as 95%, but expect to average around 75%.  It depends on the broker. It is possible to sell the option before the expiry; but if you’re assured the option will land ‘In the Money’, it’s best to wait for the expiry to lapse to receive the maximum amount on investment.

This early close feature is called, as it should be, the Early Closer Feature. The ECF allows you to sell either a Call or Put Option before the expiry time finishes. So, there’s actually the ability to sell both options and make a profit from both of them. It doesn’t get much better than that!

 

 

 

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