Many people who are too scared to try binary options choose to trade traditional options through their existing broker instead.
However, comparing traditional options to binary options is almost as bad as comparing apples to oranges. Although, with the right parameters, you can trade traditional options in a way that is similar to simplicity of the two (technically three) outcome binary options.
Consider this a substitute for binary options, similar to the way margarine can substitute for butter.
At the end of the day, margarine is still not butter. It doesn’t taste the same. It doesn’t bake up the same. But it gets by.
It can satisfy that craving for real butter, while being a healthier option. Of course, the chemicals added to many margarines leaves one to question whether or not it is a healthier option. In truth, both can kill you.
This is an apt description of the simple technique that I am drawing to your attention.
It’s not the same as trading binary options. You can lose money just as easily, so it may or may not be healthier for your portfolio. But it can function as a way to satisfy a craving when real butter/binary options are just out of reach. I must confess that I have been indulging in a little margarine myself, which is part of the reason you haven’t heard from me as much lately.
Here’s the technique in a nutshell…
Buy cheap traditional options on the Friday that they expire.
When it comes to expiration date, 24 hours can make a big difference in premium. Regularly, I see options priced on Thursday for over a dollar collapse to 5 cents the next day. So why waste your money buying them on Thursday. If you believe that there will be price action that will lead to a substantial difference between the morning and later in the day, then pick up some of those cheap options. It is not difficult for an option purchased early in the morning for a few cents to double. Even if the strike price is still out of the money, if the underlying moves favorably in your direction and there is enough time left in the day, the price can go up astronomically.
Like binary options, you are either right or you are wrong with this strategy. If you do not get the price movement, and get it soon, then you will lose 100% of your investment. If you are buying them blind, you will lose more than you win. If, however, you pay attention to the same trends that we follow through the robot, notably the MACD and RSI, you can increase your odds of making money.
I had a few weeks of with almost a perfect score of consecutive wins. However, the market pattern reversed and caught me by suprise. My attempts to double down to exit the trade with at least a break even sunk me deeper when I did not get the reversal I expected. Like with binaries, you can lose big with this high risk trading strategy as well.
I would not recommend this investment strategy as your primary means for investing. However, it can be a fun way to game the market with extra investment money that you can afford to lose.
Please understand all risks before entering a trade, and do not view the opinions expressed here as professional advice. As usual, I am just sharing my experiences with you–the good and the ugly.