ConceptUp/Down optionsDaily Stock OptionsPair Binary Options
Pair Binary Options
Pair binary options are a straightforward way to trade on the performance of an individual stock against the equity index it is part of. As long as you have an estimation that a stock will underperform or outperform the market it belongs to, pair binaries are one of the proper tools to capitalize on such trading ideas in a simple manner.
The versatility of pair options lies in the opportunity to have the option expire in-the-money both on falling and rising markets, as well as on oppositely directed movements of stocks and indices. What matters is the relative performance of the 2 selected assets. As long as the daily percentage change of the selected asset exceeds the opposing asset, option will expire in-the-money irrespective of the exact price shifts.
No preset combinations are provided. Traders are free to select any Index & Stock pairs from available markets. The only limitation is that the stock has to be part of the selected index. Similar to Daily Stock Options, options' performance is not tracked intraday, only close price of the previous trading session and close prices of the current trading session are used for defining the outcome at expiration.
Applicable Payouts: identical to Daily Stock Options; base level is 70%.
Option duration: 1 full trading session of the respective market
Option setting time: Orders can be placed at any time during workdays. Those will remain in "Pending" status until the start of the closest full trading session.
Trader built up a binary pair consisting of the German DAX Index against BMW stock and believes that the auto manufacturer's stock will perform better during the coming trading session.
DAX index previous trading session close was 10.000 and fell to 9.930 during the day (-70 points, -0.7%).
BMW stock on the previous trading session close was at 85 and slightly depreciated to 84.5 at market close (-0.5 EUR, -0.59%).
Although both instruments depreciated during the trading session, BMW relative performance appeared to be better as it depreciated less than the entire market, i.e. the index. The option would expire in-the-money, which is with profit.