Straddle or Die: Hedge Your Risk or Increase It?
Straddle or Die: Hedge Your Risk or Increase It?April 9, 2013
Straddling is particularly a risky business in the already extremely high risk trading environment. Make a mental note that the Cysec-licensed binary options brokers do not operate the same way traditional brokers do, or for that matter like the big exchanges such as NADEX or CBOE.
When you straddle you hold both a call and a put position with the same expiration date & strike price. This strategy should only be used if you believe there will be a significant fluctuation (up or down swing), but you can’t decide on which direction. Now,
To further compound an already complicated situation, stock options that are set to peak have higher premiums, and naturally this takes a bite out of the expected payout should your contract expire in the money.
However, since we are not dealing with your usual Wall Street broker, this is not the case. Meaning, the whole payout structure is designed differently, and all you have to do is deposit and guess the right direction. There are no fees involved, just pure talent and a focused strategic approach (of course a little luck never hurts).
So How Does this Work in Reality?
Step 1. Open a real money trading account with a recommended broker such as Traderush or 24Option
Step 2. Pull out your credit card and deposit. Make sure you get the best possible bonus (it’s OK to haggle)
Step 3. Enter two positions on the same stock (call and put) just like I mentioned above.
*A little trading tip for beginners: Don’t straddle on 60 second options – it’s completely insane.
To sum up, straddling is just one binary options trading strategy designed to help you profit. However, just like everything else in life, if you fail to identify the correct signals you stand to pay a very heavy price.
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