Binary Options

[D70]

I have followed the binary options market since its infancy.

I traded them (rather successfully) around 2005 onwards but stopped when brokers like IGIndex widened the spread to take away any edge that could be had. If I remember correctly, I worked my way up to a size of £200/pt.

Does anyone still trade binary options and make consistent money out of them?

I made 1000s of trades and found them to be generally mispriced by 2 points. By widening the spread, brokers such as IGIndex effectively eliminated the edge I had and just better than breakeven was all I could manage.

Anyone trading them still?

 

[moka2]

I have followed the binary options market since its infancy.

I traded them (rather successfully) around 2005 onwards but stopped when brokers like IGIndex widened the spread to take away any edge that could be had. If I remember correctly, I worked my way up to a size of £200/pt.

Does anyone still trade binary options and make consistent money out of them?

I made 1000s of trades and found them to be generally mispriced by 2 points. By widening the spread, brokers such as IGIndex effectively eliminated the edge I had and just better than breakeven was all I could manage.

Anyone trading them still?

Hi Which Binary options ? on NADEX in US ( WHich nothing but IG Index) or on IG itself? or those hundreds of low regulated / unregulated firms!

 

[D70]

Sorry, not sure your question?

Do you trade binary options?

 

[moka2]

Sorry, not sure your question?

Do you trade binary options?

SImple question D70
which Binary options are you talking about?
IG Index/ Nadex (USA) or the other highly unregulated from Cyprus

 

[Loustar1]

I'm quite interested in binary options but can't seem to find any reliable info on the subject - any suggestions?

 

[moka2]

I'm quite interested in binary options but can't seem to find any reliable info on the subject - any suggestions?

IG markets / UK, Australia or Nadex would have it's own info but these are OTC
There are CME Binary options but don;t think they are liquid

The other way to build a binary option is by using Cash settled Call Option spreads on regulated exchanges Note: must be cash settled and European style
Fora stiek diff of $1.0 if you buy or sell a spread sat say 0.45:0.47 then that is like a Binray
max loss = $1.00 - 0.45
MAx profit = .45

Apart form these ther are few dozon Non/ semi thinly regulated Binary option so called brokers beware! it is a wild west!

 

[hungry4pips]

I have followed the binary options market since its infancy.

I traded them (rather successfully) around 2005 onwards but stopped when brokers like IGIndex widened the spread to take away any edge that could be had. If I remember correctly, I worked my way up to a size of £200/pt.

Does anyone still trade binary options and make consistent money out of them?

I made 1000s of trades and found them to be generally mispriced by 2 points. By widening the spread, brokers such as IGIndex effectively eliminated the edge I had and just better than breakeven was all I could manage.

Anyone trading them still?

Hi there,
may I know where I can get info on binary options? Did u trade forex options or stocks & commodities?

 

[MacroStyle]

I sometimes trade 1m binary FX options on IG. I have found mispriced low delta ones because they don't appear to use the vanna-volga adjustment. Although D70 is right, the edge is often lost in the bid offer.

 

[D70]

I sometimes trade 1m binary FX options on IG. I have found mispriced low delta ones because they don't appear to use the vanna-volga adjustment. Although D70 is right, the edge is often lost in the bid offer.

I dont know what the vanna-volga adjustment so thanks for that info.
I used to wait until the last news item was out and then crack off as many binarys as I could before all the time value had been sucked in.

It worked for 3 years great until they moved from a 2point spread to 4 point spread.



Havent been able to find a hole in them since.

 

[moka2]

Hi
I sometimes trade at exbino i'm new and there took my first steps

Regulated in Seychelles

When MF Global and PFG best with CFTC SEC goes down how can one truct sucha a small jursdiction?

 

[davidfielder]

I am just curious if anyone like me uses binary fx options as part of an overall trading strategy. I haven't found a post on this anywhere and I think it's a shame. I would like to learn more from others on how they use BOs in strategies that are possibly better than mine and as such, just leaving this out there for someone to direct me to the right place. I have been trading for 12 years and have also been involved on the operational side of forex and binary options companies (no hiding that) but I also trade and that's why I ask

Thanks in advance for the help

David

 

[D70]

I am just curious if anyone like me uses binary fx options as part of an overall trading strategy. I haven't found a post on this anywhere and I think it's a shame. I would like to learn more from others on how they use BOs in strategies that are possibly better than mine and as such, just leaving this out there for someone to direct me to the right place. I have been trading for 12 years and have also been involved on the operational side of forex and binary options companies (no hiding that) but I also trade and that's why I ask

Thanks in advance for the help

David

Look a little harder...........

 

[davidfielder]

I sometimes trade 1m binary FX options on IG. I have found mispriced low delta ones because they don't appear to use the vanna-volga adjustment. Although D70 is right, the edge is often lost in the bid offer.

You (and D70) are right. But I think you guys are missing the point about how binary options function from the perspective of a non-exchange traded (OTC) product. Leaving aside the issue of making markets, which I will explain below (although MMs are a cause of pricing issues on lightly traded assets like some stocks). But if you are trading forex or indices via binary options or major indices, I highly doubt you will see more than a 0.5 pip differential. The most I have seen has been about 1.5 but that was over the summer about an hour before and after NFP. So I wasn't going to complain.

In general though the issue of pricing of binaries isn't based on B&S. Actually, it's much closer to spot whereby the market maker builds a supply and demand smile internally and relates it to the greeks AFTER. Seeing as how you can't find an intra-day quote anywhere outside the binary "brokerages" (wild west?) the greeks are basically a waste of time. However, if you want to arb them based on the fact that they are out of market, you can.

What I mean is that despite D70 being 100% right that the binary firms are in fact out of market at times, (and as explained by MacroStyle) this is based on internal demand as it relates to the intra-day greek based model they use to counter that demand in terms of pricing.

However, that model isn't able to bring the price back to spot 100%, and that results in an arbitrage opportunity. If you are willing to hit the broker when he's out of the market, and risk the loss, then the broker will allow it 100% . They actually have no way to stop you. In reality, they don't want to stop you because you as the one taking the "out of market price", are in essence balancing their book. This is very similar to how banks settle risk internally- both in fx and stock MMing (by edging prices in one direction or another in order to rouse demand, even at a seeming small loss as it results in a balanced book that still maintains an internal spread).

Not sure if everyone got the explanation, but I can go further and explain if anyone wants.

 

[davidfielder]

Hi
Aha - found a few now.
Already responded to an interesting one about how BOs are built and the out of market pricing issue

 

[D70]

Hi
Aha - found a few now.
Already responded to an interesting one about how BOs are built and the out of market pricing issue

I see what you're saying.
I think the broker I was using did base their prices on blackscholes because I modelled it and got the same number.
My problem now is that they know they're losing on it unless they increase spread. Which is what they did.

 

[davidfielder]

I would have recommended trading with a broker with a no spread method. Not many exist, but those on the spotoption platforms work on a supply demand model and not a spread model (like tradologic, marketpulse, and orca platforms).

 

[scottb]

IG markets / UK, Australia or Nadex would have it's own info but these are OTC
There are CME Binary options but don;t think they are liquid

The other way to build a binary option is by using Cash settled Call Option spreads on regulated exchanges Note: must be cash settled and European style
Fora stiek diff of $1.0 if you buy or sell a spread sat say 0.45:0.47 then that is like a Binray
max loss = $1.00 - 0.45
MAx profit = .45

Apart form these ther are few dozon Non/ semi thinly regulated Binary option so called brokers beware! it is a wild west!

Hi, I know yours is a rather old post. I've been making money trading binaries, but anything I discover and make money from, then the spreads are soon increased or the market withdrawn, I googled European style cash settled options but found little information. How frequently do these expire? I'm very short-term, typically minutes or hours, so to find an instrument I can exploit in the wider market has always been a challenge. Would appreciate your time if you have a couple of minutes to answer. Also is the spread in your example realistic - or just an example?