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Forex Stock Exchange Forum  » Forex and Stock Trading English Forum » Binary Options Trading School » Index-asset divergence trade

Index-asset divergence trade

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1attention Index-asset divergence trade Sun May 31, 2015 3:49 pm

masstergeek_binary

masstergeek_binary

This is another popular strategy that entails hedging a binary option based on a company’s shares with one whose underlying asset is the trade index that includes the same firm. For example, imagine that you decide to open a ‘call’ binary option with Apple because you think the value of its shares will appreciate in the near future. In order to hedge this bet and if you also believe that the stock markets will generally fall in value, you could also consider activating a ‘put’ binary option based on the S&P500 of which Apple is a composite company.
Consequently, this strategy will help you minimize your risk and allow you to support your trust in trading your selected asset. In addition, you could provide yourself with the opportunities to compound your profits, maximize your returns and minimize your risk exposure. For instance, with the example just described you could achieve a double profit pay-out if your calculations prove correct.

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