Mia R. from Bavaria, Germany Hi. I’m trying explore more trading opportunities with binary options via pairs trading. How does this instrument work and is it a good choice?
Hello Mia and also to our CompariZone readers. Pair options is one of the most interesting ways to trade binary options. With this instrument, you are speculating on the relative performance of assets and profits are made by guessing which stock in a given pair will perform better in a given period of time or contract.
Let’s take for example, the pair of Oil and Gas. Here, you picked Oil to be the better performer in the next 10 minutes and you opened a pair option trade of $100. This option will give you an investment return of 82% if Oil performs better 10 minutes after your trade has been executed or expires in the money. That means your $100 initial investment will get an additional profit of $82 giving you a total of $182 in return. Otherwise, your option will expire out of the money and you lose your investment. That’s how simple it is.
If you’re planning to trade pair options, we highly recommend that you consider trading with StockPair. They offer pairs trading on a selection indices, stocks and commodities with a flexible choice of contracts ranging from 5 minutes up to 14 days. They also have two types of pair trading options: Fixed and Floating.
With Fixed Pair options, the better performing asset is determined by the pair’s relative performance from the time the option was purchased until its expiry. On the other hand, the better performing asset on the Floating Pair options is determined by the pair’s relative performance during a predefined day, week or month in which the trade took place.
If you’re interested in trading with this broker then you may click here to access their website.