hi and welcome to the binary optionstrading tutorial this is Steve Wise and today we're going to talkabout the binary options hedge with a call and a put position and i just like to remind you that this tutorial and audio content and theslides therein are the property of binaryoptionbroker
and we're distributing this on so follow the guidelines on to usethis tutorial if you want redistributed and just bear in mind the rules andregulations with regarded to using it. all right so with that out of the way let's get started so let's take a look at a couple slidesi've made this first slide is
your basic naked binary option trade and what we've done here is we've takena binary option call on google we'vetaken a two hundred dollar position with a strike price at five seventy seven fifty per share that's what it was at the time i madethis slide in and made this discussion all the numbers all the details of thistrade that we talk about are covered on the website binaryoptionbroker
and you'll find all the information inall the all the percentages and what have you uh. there so if you have any questions about what thenumbers are and what they are meeting where they all came from that's all is going on the website but what i want to talk about in this tutorialis that this kind of position taking a nakedcall
binary option is very risky in it's not the kind of investment that isee as uh. a favorable one for you theinvestor and the reason why i say that is because there's so much downside risk and noprotection if things go awry and that's not the kind of trade iadvocate what i prefer to do
is i'd prefer to pair my binary option with another option either another security another optionanother binary option the underlying security itself maybe i already only underlying securityand i'm trying to make up some profit on that uh. taking advantage of market movementdownside upside what have you
Nadex Trading Platform Tour
Thank you for your interest in Nadex binary options and for taking the time to view this 30minute session. In thisbrief walkthrough of the platform we will cover what is abinary option, how to place a trade, how to close atrade, and how to navigate the trading platform. Before we begin we should talk a little bit aboutNadex. Nadex is the exchange.
The North American Derivatives Exchange is the first and largest binary options exchange designed for theindividual trader in the United States. We offersimplified options. We do need to do a quickdisclaimer Futures, options, swaps and any trading that you do does involverisk. Unlike leveraged accounts, you can never losemore than what you put up for with each trade.
So your losses can never exceed your trade cost or your initial deposit. We're going to gothrough some examples today. Some buy examples, some sell examples these are random examples. This is not trading advice orrecommendation to buy or sell any particular contracts at Nadex.
Nadex is registered with the CFTC that is the Commodity Futures TradingCommission.That's the government agency that oversees the regulation of futures, options, and swaps trading on USexchanges. This should give you some comfort that Nadex operates in a regulated environment, which is important for all traders particularly in our spacewhere the majority of firms out there are not based in the US or regulated bythe CFTC.
Nadex is the only exchange in the US to offer binary options on such a widerange of markets including forex, indices, and commodities all of which are available on our platform. Nadex has two types of options. One is called a binary option and the other is called a spread option Today we're going to go through thebinary option in about 30 minutes.
There are other webinars and tutorials and written material on the spreadoption. A spread option is a limitedrisk contractbut it has different properties, characteristics, than the binary option. So let's go to what exactly is a binary optioné Well, it's a simple yesno proposition or a yesno question. The question could be: Will gold be above a certain price at a given timeé
What are Binary Options Nadex
Trading a binary option is simplymaking a true or false prediction about the market. Like if you think gold's going to be higherby 1:30pm on Tuesday you can make a trade on your prediction.And when 1:30 on Tuesday rolls around, you're either right and you make money, oryou're wrong and you lose some. All binary options are priced between 0and 100 dollars the price is a reflection of how likelythe market sees an event as happening. Take gold for example. Let's say there'sa binary option that says
gold will be above 1343.5 at1:30pm this afternoon. Because the market forecasts a fiftypercent chance of gold being above 1343.5 at 1:30, this binary option is fifty dollars. If you predict the statement is true, youcan buy the option. Other people will predict the statementis false, and they'll sell the option also for fifty dollars. Together your 50, and their 50, make up the total cost ofthe binary contract
A hundred dollars. And when the clockstrikes 1:30, whoever's right takes home the hundreddollar payout, and whoever's wrong gets nada and that's the end of thestory. Oh wait, let's rewind a second. Let's say instead of waiting forexpiration, you decided to get out of the trade before 1:30. Yep, that's an option with Nadex. Afteryou place a trade, you can change your mind. Close early to limit losses orlock in gains. Plus you always know how much money youcould lose or gain
right off the bat because Nadextells you, which is quite nice of them when you think about it. So set up an account for free and checkout all the short term trading opportunities with binary options.