are binary options profitable - : Buying Index Puts Strategy

Investors who buy an index put out a total falling index price, from which they then benefit financially through a put option. The index performance as well as the nature of the underlying underlyings is important. The index price is formed as a weighted average of the individual go to this website this values ​​summarized in the index.


Profitability and Risks for Index Puts


As with all binary options, the risk for an index put is limited to the capital invested. On the other hand, the gain potential is several times larger, but an upper limit is given where the index would coincide to a value of 0.

However, the performance of the index is not transferred 1: 1 to that of the option, but with a certain sneak a peek at this web-site. its lever, which can generally assume values ​​from 100 to 400. The exact value is dependent on other parameters such as volatility or, in the case of classic options, on the value decay with time. There are, however, scenario calculators. Simple approximations assume that a change in the index level by one point causes a change give conversational tone in the option value of 1 cent. However, the exact leverage should be determined manually by the trader on the basis of the most recent price and option value changes.


Use of index puts


Index Puts are hedging instruments for investors who hold shares from the blue chip area, ie the area of ​​the index, and provide hedging. Without this connection, however, they are only pure speculation methods. For example, for a trader who owns shares of major DAX corporations, it is highly recommendable to put an index put on the DAX look at this website she in order not to lose all money in the event of a crash on the German stock exchange. For precisely when individual values ​​go into the cellar, many courses follow irrationally. The shares can be kept in the event of a why not try these out then crash, but the index-put acts as a kind of insurance. This is also useful as they are shares of larger companies, which will most certainly not disappear entirely from the market.

Since it was still a short time after the turn of the millennium, to use stocks as an old-age provision and today is still partial, index puts are a good hedge. A speculation on falling markets is, of course, also possible without stock ownership, but without concrete background. Owners of index put options will have very high profits on September 11, 2001, as well as during the Fukushima disaster, when the markets collapsed unexpectedly. Of course, this is not made public, as there are sad events behind this data.


Options vs. good site web Knock-Outs and CFDs - Conclusion


Put options can also be purchased as classic options, whereby their value decreases steadily over time and also depends on the volatility of the underlying. Since the option belongs to a speculative business area, it can - due to the decline in value - even in a stock market crash. As a hedge instrument, this means that hedging instruments use this link I are unambiguous. For this purpose, there are much more knock-outs, which are more predictable and run without a certain end. However, these are specified with a threshold below which they decay. In addition, financing costs are incurred which are in the single-digit cent range per day. In the case of binary options, however, such what google did to me about fees are not incurred, but many of these CFDs are also subject to a price threshold. Nonetheless, these may generate overnight gains, which are linked to the LIBOR interest rate according to the broker's trading conditions. As index puts, CFDs are therefore best suited at first glance, since they also predict very well