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TorOption:
Diverse Strategies to Profit in the Options Market

4 binary options strategies to create profit opportunities for yourself

Although the binary options market is made to be simple, it is not devoid of many diverse choices for a trading strategy. The way that most investors make money is to embrace all of these strategies and use them at the appropriate times. Here are a few of the ways in which you can use binary options to create more opportunity for yourself in whatever market you choose to participate.

The Naked Directional Play

Naked directional options plays are the simplest play for a binary options investor, and they are also the riskiest. A naked directional play means that an investor only plays one side of a binary options trade. If you are betting for a particular action to occur in the market, then you do not take up any cover on the other side. If you play the trade perfectly, picking the appropriate action and timing it correctly, you stand to make a great deal of money. Naked directional plays are the stuff of legend, in which an investor will make an exponential amount of money off of an investment in a matter of hours or days.

Learn diverse binary options strategies with TorOption

Utilizing different binary options strategies enables market trader to increase potential profit opportunities in the markets of their choosing.

The downside to the naked directional play is that there is no cover whatsoever. If anything goes wrong during the trade, the investor stands to lose a large percentage of the investment, if not the entire investment. If a naked directional play is taken on an option that expires relatively soon, many professional investors think that it is no different from gambling. However, the naked directional play is a valid trading option if you are truly sure about the timing and the direction of the underlying investment. Although it should be used with caution and in conjunction with other techniques, it is not a technique to be completely shunned by any means.

Playing Both Sides of a Trade

One of the best ways to set a limit on a market loss is to play both sides of a trade. In a binary options market, trades that are opposite of each other move very closely against each other. This is not always the case in the regular securities market; however, the binary market is a bit different based upon the simpler choices.

In order to play both sides of a trade, an investor must still pick a preferred side. However, the investor will also buy options on the other side of the trade in order to limit the loss that can be taken on the trade. By limiting the loss in a portfolio of trades, a TorOption investor can easily manage the risk mathematically over the full spectrum of trades.

Trend Strategies

One of the most effective yet simple strategies that many new investors take is based on trend lines from charts. If a trend shows that an option will go up, then an investor should choose the call option. If the investor believes that it will go down, then an investor would do well to choose the put option. The true art of the trend strategy is figuring out whether a trend is truly going up or down and if it is preparing to switch directions.

In order to predict the movements of a trend, an investor should learn about switch points and resistance levels. Securities do not move in one direction forever, and just because a stock or an option is moving in one direction does not mean that it will stay moving in that direction until the maturity of your option. Timing is very important in these types of strategies. This is why an investor must choose this strategy wisely. It is usually most prevalent when there will be no upcoming news about the security and a trend has already been set.

Straddling an Option

A strategy for a security that an investor expects to move in a volatile fashion is a straddling option. You could consider this the same kind of strategy as playing both sides; however, the calls and puts that an investor purchases are made at different times. In some cases, an investor will try to catch a "swing" in the price of a security, seeing that it is going down but will reverse the trend based on a news item in the future. The opposite can also happen – a security can be going up, but an investor will purchase a put on it because the investor expects the security to reverse itself based on a news item in the near future.

Straddling an option requires advanced techniques, but it is considered one of the most viable strategies for the binary options market.

All of the above strategies can be used in the binary options market. However, they are by no means a full list of the strategies that a seasoned investor will use. Be sure to keep your ear to the street and focus on the research from reputable sources like TorOption.

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