One of the nice aspects of trading on the Nadex Exchange with binary options is that you can have defined risk overnight. Earnings are coming out fast and furious for the next few weeks and Tuesday afternoon will see MSFT after the bell at approximately 4:10 p.m. ET.
You can always pull up the markets when you get home from the office and check out the trading opportunities using the daily or weekly binary options on the Nadex Exchange. Here we see a chart of the indicative index, which is based off the CME E-mini Nasdaq 100 September Futures contract. This chart is as of 7:15 p.m. ET last night, leaving exactly 21 hours until expiration at 4:15 p.m. ET this afternoon.
Regardless of your directional bias and your volatility expectation through Tuesday trading, there are binary options at a variety of levels for all trading possibilities. If you’d rather trade in the morning before heading to the office then there are always similar opportunities with exposure all day and defined risk so you don’t have to manage the trade if you don’t want to.
Here we see a chart the same indicative index based off the Nasdaq 100 as of 7:45 a.m. ET this morning.
The index has fallen more than 12 points, and there now remains about 8½ hours until expiration at 4:15 p.m. ET today. By watching how the markets move over time you will become more familiar with the optionality of these trading products and can become a more profitable trade.
There are many things you can learn from watching how particular markets react over time. One quick takeaway from these two charts I’ve included is that even though the indicative index has dropped from 4,609.00 to 4,596.75, the bid/ offer for the >4,568 binary option has not changed much. Even though the market has moved in your favor more than 12 points, there has also been 12½ hours of time that has eclipsed…and guess what… that time cost money.
When you are trading far out-of-the-money binary options, you want to become familiar with how the markets react to underlying market moves. When you’re trading for such large market moves over very short periods of time you must realize that there will be premium decay over time even if the trade moves in your direction.
Open a demo account and get $25,000 of demo funds to practice with before trading with real money. This is just one example of how binary options can be used for defined risk trading in volatile markets. Try it out for yourself to see if binary options can add to your trading toolbox and increase profitability in the markets.
Note: Exchange fees excluded for calculations.
Futures, options and swaps trading involve risk and may not be appropriate for all investors. Past performance is not necessarily indicative of future results.
The post Nightly Nasdaq Binary Option Trading Tips appeared first on Nadex.
