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Binary Stock Options

Stock OptionsStocks are an asset class listed in the binary options platform of brokers in the market.

They typically form the largest asset class, and it is not unusual to see a listing of stocks from different exchanges all over the world.

Trading binary stock options requires a thorough knowledge of the fundamental drivers of stock price movement on a day-to-day basis, in addition to the regular technical plays that are used in other markets as well.

These fundamental drivers would include the following:

  1. Earnings reports: this is one of the main fundamental drivers of stock price movement.
  2. Employment data, e.g. the US Non-Farm Payrolls.
  3. Interest rate decisions and other central bank policy statements. Lately, quantitative easing policies from global central banks and the scope of the bond purchases as part of this policy by the world’s central banks have become a very important factor driving stock price movements.
  4. Mergers/acquisitions
  5. New product development e.g. Apple’s game-changing iPhone.

Stocks in most global markets are capable of wide intraday movements, making them very suitable as assets to be traded in the binary options market.

Trading Binary Stock Options

Today in the binary options market, it is possible to trade binary stock options in two ways:

  1. Trading classical binary options contracts
  2. Trading the Pair Options

Before deciding on which of the two ways that you want to trade stocks in the binary options market, you have to first prepare yourself for the trading process. First you must consider your geographical location and familiarity with the stock markets and listed assets in your geographical area. You must be familiar with the stock you are trading in order to be profitable. For instance, if you live in the US, it is more likely that you will be familiar with the factors that affect the profitability of Starbucks than someone who lives in the Middle East, just as a trader living in Russia is more likely going to be more familiar with the factors that drive the performance of Lukoil or Gazprom that someone from New Zealand. Unlike in currencies or commodities where affecting factors are more global, stocks tend to have more affectation from local factors, except in companies with truly global reach like Apple and Google.

Once you have identified your region of interest, open a trading account with a binary options broker that lists stocks assets from your region. You therefore have to go through a list of brokers and check out their asset index to do this.

The next step is to choose which of the option trades would best suit the trade purpose. Binary stock options are usually traded using classical binary trades such as the Call/Put trade type. Other trade forms exist, and the trader has to study how to use them to trade the binary stocks.

Trading pair options involves trading the performance of one stock against another stock of comparable standards. Comparable standards in this case could mean stocks listed in the same sector, or stocks that offer similar products e.g. Apple vs Google (as smartphone and tablet makers), or Facebook vs Google (as social media networks), or Apple vs Microsoft (as operating system software manufacturers).

On this site, we will outline several trading strategies that can be used to trade binary stock options as well as show you live trade examples that will be performed on binary stock assets.

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