LWMA CallPut Binary Options Strategy

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Covered Call Binary Option Strategy – How It Works

What is a Covered Call?

How to Use a Covered Call in Options Trading?

Imagine a trader bought a call option for Facebook shares with 24-hours expiration time. However, quotes chart an intraday reversal signal on 15-minutes chart in the middle of the trading session. Technical indicators point to a possible reversal action or retracement required for the buyers of call options to regain the momentum, while short-term oscillators have to be reloaded, coming off the overbought territory after a sharp price swing.

In that case, it would be attractive to open a series of deals, buying put options with 15-minutes expiration until the opposite reversal signal occurred. As a result, the trader would still hold the call options previously bought following the long-term trend with a high chance of getting the profit at the end of the day. At the same time, the counter-trend correction gives a chance to maximize potential profits, implementing the intraday trading approach and catching a micro-trend.

Another application of the Covered Call Options Strategy is related to intraday conditions influencing a sudden reversal of the underlying asset price. For example, that might happen in case if an announcement was published, shifting the traders’ sentiment and influencing a sharp sell-off in the middle of the trading session. Even though the overall trend remained the same at the end of the day, using Covered Call Options would hedge the trader from possible risks coming together with unpredictable price fluctuations.

Covered Call Max Profit

Managing the trading volume

Covered Call Example

The technical analysis on the daily chart below points to a long-term uptrend for the price of gold. After a short-term retracement, gold prints a strong by-the-trend action of the daily candlestick marked with the green arrow on the screenshot (August 25). The intraday price action is consistent and gradual, the strength of the underlying asset is robust. It would be reasonable to continue the trading cycle of buying call options on the other day as well, and imagine a trader opened the appropriate deal on August 26.

[sup]If you like this strategy, you might also be interested in this Hanging Man

The next day, however, brings a sudden change in the technical sentiment. The intraday chart has a clear reversal signal on a one-hourly timeframe (see the chart below). The 14-hours Relative Strength Index comes off the extremely overbought level, Commodity Channel Index confirmes the previous signal, charting a bearish divergence. As a result, the technical analysis points to a short-term retracement of the underlying asset and the trader starts buying put options with 60-minutes expiry although the 24-hours call option is still in play. The total number of red hourly candlesticks is comparatively large, and the overall profit from covered options is robust. Once the micro-trend ends and the price reverses the action, closing the day with a minimal gain, the initial deal ends in the money as the daily candlestick is green. Thus, the trader took profits from both calls and put options opened simultaneously with different expiration periods.

Binary Options Strategy

Welcome to our binary options strategy section. Here you will find a beginners guide to strategies, leading on to more advanced information about things like money management, and articles on specific strategies.

Basic Strategy For Successful Trading

Strategy is one of the most important factors in successful binary options trading. It is the framework from which you base your trade decisions, including your money management rules, and how you go about making money from the market. There is no one Holy Grail unfortunately, if there were then we’d all be using it!

The two most very basic categories of strategy are:

Fundamental strategies focus on the underlying health of companies, indices, markets and economies and while important to understand, is not as important to binary options as the technical aspect of trading.

Technical trading, or technical analysis, is the measurement of charts and price action, looking for patterns and making educated guesses, speculations, from those measurements and patterns.

Strategy simplifies your trading, takes guesswork out of choosing entry and reduces overall risk.

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The text book definition reads like this; a plan of action designed to achieve a goal or overall aim, the art of planning and directing operations in order to achieve victory. When it comes to trading the goal is to 1) make money and 2) not lose money.

The number one method of achieving this goal is to use a rules based approach to choosing entries that relies on ages old, tried and true technical analysis indicators. There are dozens, possibly hundreds if not thousands, of ways to trade the market, all strategies. They can be categorized in terms of the tools used, the time frames intended, the amount of risk associated with and many other ways, these being the primary.

  • Price Action/Scalping Strategies – Price action strategies rely on the movement of the market to time entry. These can be trend following or not, long or short term and utilize bullish or bearish positions.
  • Trend Following/Directional Strategies – Trend following strategies target assets that are trending strongly to pinpoint a series of profitable entries with a high rate of success.
  • Range Bound/Short Term Strategies – 99% of the time the market, or an individual asset, is not trending but trading in a range within a high and low mark. These strategies focus on support and resistance levels, reversals within the range and short term trends as asset prices move up or down from support to resistance and vice versa.
  • Long Term/Momentum Strategies – These are the less risky of the strategies as they target stronger signals and longer term time frames. These signals have a higher chance of success but take longer to develop and longer to unfold than other types of signals.

A technical analysis indicator is, most often, a mathematical formula which converts price action into an easy to read visual format. Common types of indicators include but are not limited to moving averages, trend lines, support and resistance, oscillators and Japanese Candlesticks.

Money Management

Strategy is 1 of the 2 pillars of risk management, the other is money management. You control risk by targeting only good signals, weeding out obviously bad signals, and never putting so much money on one trade that it will wipe out your account.

Money management is the control of your overall trading fund. It should clarify trade size, and long term financial management – leaving you to focus only on trading. A well thought out money management structure should simplify:

  • Trade size
  • Risk management
  • Future growth
  • Stress

A trader with a clear financial plan should not need to be concerned with whether they can trade tomorrow, or if their trade size is correct or how they might grow investments in line with their progress. All those decisions are controlled by managing their overall capital with a clear plan.

Japanese Candlesticks

This is the most common method of viewing price charts. The candlesticks give an easy to read view of prices, open high low and close, that jumps off the charts in way that no other charting style can do. They are the basis of most price action strategies and can be used to give signals as well as to confirm other indicators.

Support And Resistance

These are areas of price action on the asset chart that are likely to stop prices when they are reached. Support is found when prices stop falling, this happens when buyers step into the market and are said to be “supporting prices”. Resistance is found when prices stop rising, this happens when sellers enter the market (or buyers disappear) and are said to be “resisting higher prices”. These areas, often represented by horizontal lines, are good targets for entries and possible areas where price action may reverse.

Trend Lines

These lines connect highs and lows formed by asset price as it moves up down and sideways. A series of higher lows and higher highs is considered to be an uptrend and a sign that prices are likely to move higher, a series of lower highs and lower lows is considered to be a downtrend and a sign that prices are likely to move lower. The trend line can be used as a target for support and resistance, as well as a an entry point for trend following strategies.

Moving Averages

Moving averages take an average of an assets prices over X number of days and then plots those values as a line on the price chart. Moving averages come in many forms and are often used to determine trend, provide targets for support and resistance and to indicate entries. There are dozens of methods of deriving moving averages, the most common include Simple Moving Averages, Exponential Moving Averages, volume weighted moving averages and many more. They can be used in any time frame, and set to any time frame, for multiple time frame analysis and to give crossover signals.

Oscillators

Oscillators may be the single largest division of indicators used for technical analysis. They include tools like MACD, stochastic, RSI and many, many others. These tools, in general, use price action and moving averages in a combination of ways to determine market health. They are displayed as a stand alone tool, usually as a line that ranges between two extremes or above and below a mid point, that can help determine trend, direction, support/resistance, market strength, momentum and entry signals.

Trading Psychology

With any form of trading, psychology can play a big part. A lack of confidence can mean missed trades, or investing too little capital in winnings trades. At the other end of the spectrum, over-confidence can lead to over trading, or increased risk – either of which could wipe an account very quickly.

So the trading psychology of the trader is very important. It can also be actively controlled or managed (at the very least, acknowledged). It is another often overlooked area of trading skill, but one well worth spending time to consider.

Read more on trading psychology and learning from experience.

A Basic Binary Options Strategy

Here is an example of some basic rules for a binary options strategy.

  • The trend is your friend, only take trend following entries.
  • In an uptrend only enter when prices are near support, in a downtrend only enter when prices are near resistance.
  • When prices are near support/resistance wait for a confirming candlestick signal.
  • When the candlestick signal appears wait for stochastic and/or MACD to confirm, a bullish crossover in an uptrend or a bearish crossover in a downtrend.
  • When rules 1 through 4 are met, enter the trade, only use 3% of account on each trade.
  • When choosing expiry use 2XCandle length. IE, if you are using 1 minute candles then 2 minute expiry, if 1 hour candles then 2 hour expiry.
  • If the trade fails examine why it did not work, make adjustment if necessary and move on to the next trade. If the trade works move on to the next trade.

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Strategies for Different Markets

Choosing a Trading Strategy

Developing a trading strategy for the binary options market requires a key understanding of how the market operates in terms of the trade contracts available, the various expiry times, and the understanding of the behaviour of the individual assets.

Unlike the forex market where the asset has to move in one direction or the other by an appreciable number of pips to the trader’s favour before profits are made, the binary options market is peculiar. Apart from the Up/Down trade which is based on direction and mimics the requirements of the trades in other markets (except the pip movements), other trade types in the binary option market operate in totally different ways. There are different trade contracts for different platforms. Some binary options contracts do not even require the trader to get the direction of the asset correct. For instance, trading the OUT contract will need the asset to hit one price boundary or the other for profit to be made. So it takes the trader being able to identify a suitable trade contract to be able to fashion a suitable strategy. What is used to trade the Up/Down contract is not the same as will be used for the In/Out contract. The contract type will determine the strategy.

For instance, trading the Up/Down contract will require a strategy that can determine if the asset will make a bullish or bearish movement. Trading the In/Out contract will require either a range trading strategy or a breakout trading strategy to identify a time when the asset stays in a range or breaks out of that range. If you are looking to develop a trading strategy for the In/Out trade, this is how your mind should be working.

In developing a strategy based on the binary options trade types to be traded, there are tools that can assist the trader. This is where chart patterns, signals services, candlesticks and technical indicators will come in. A simple tool like the pivot point calculator can be used as part of a TOUCH trade strategy with very effective results. Using tools like these will take us to the next part of choosing a strategy, which is how to understand and set expiry times.

Understanding Expiry Times

Expiry times are very important to binary options, because all trades in this market have time limits. However, not all binary options trades require time limits to be successful. Trades such as the Up/Down trades must reach expiry before the trade outcome is known. In contrast, trades such as the OUT component of the boundary trade or the TOUCH component of the High Yield Touch or Touch/No Touch trade contract must not necessarily reach maturity before the outcome of the trade is known. If a trader bets on a TOUCH outcome and the asset touches the strike price well before expiry, the trade outcome is already known and the trade is terminated as a profitable one.

So if the trader is not very good at setting expiry times/dates (and really, no trader in the market can boast of getting his expiry settings right all the time here), the binary options trading strategy will have to be tailored towards trade contracts which are not totally expiry-dependent.

Now when you identify and separate trades that are not so dependent on expiries from those that are, you can better understand what kind of strategy you would be looking at.

Understanding Asset Behaviour

The binary options market combines assets from different asset classes into one market. These assets do not behave alike. Some assets are very volatile with large intraday movements. A very clear example is gold. Some binary options assets are not traded round the clock but only at specific times e.g. the stock indices. The factors that may trigger a massive move in a stock index would obviously not be the same for a commodity or a currency. Even within the same asset class, no two instruments are exactly the same or behave alike.

An understanding of asset behaviour is therefore key to being able to develop a trading strategy for the market. It is up to the trader to study the behaviour of assets, understand the technical and fundamental indicators that will influence the behaviour and price movement of that asset, and then create a trading strategy that will work for that asset.

Demonstration

In this section, we will demonstrate the application of all the parameters we have mentioned above using a simple but effective trade strategy.

– The strategy we will use determines price bullishness/bearishness, so we will trade a Call/Put contract.

– We will trade the strategy on a one hour chart, so it will be have an expiry of one hour. We do this using our understanding that the effect we want to trade on the hourly chart, will happen in an hour.

– We want to use this on an asset that is liquid and responds to the strategy. So we will use the EURUSD.

The strategy has been used to create a colour-coded indicator, which shows a green arrow on bullish signals and a red arrow for bearish signals. It aims to trade the EURUSD because this currency responds very well to price stimuli during the London/New York overlap in the forex time zone, and the response can be delivered in an hour.

As soon as the red arrow appeared (as shown above), the signal was to trade a PUT option on the Call/Put digital option. Using this signal, the trade was executed on the binary options platform. The price of the asset (EURUSD) fell in one hour from the time the signal was generated to the expiry, producing a trade result in our favour.

This strategy (a custom strategy) fulfilled all our conditions:

a) It was suited to a trade contract on the binary options market.

b) It was a strategy that was suited to help the trader use a suitable expiry.

c) It was suited to the behaviour of the asset and above all, THE STRATEGY WAS A PROFITABLE ONE.

Стратегия для бинарных опционов Binary Options Super Trend

Стратегия для бинарных опционов Binary Options Super Trend названа в честь используемого в ней индикатора SuperTrend. Стратегия не совсем подойдет новичкам, так как она трендовая и при работе с ней нужно иметь некий опыт в трейдинге. Но она легка в понимании в плане индикаторов, потому что в ней их всего два, и один из них всем хорошо известен.

Используя эту стратегию для бинарных опционов с умом и держа эмоции под контролем, можно начать получать стабильный профит торгуя бинарными опционами. Входов по сигналам этой стратегии будет не так много, но зато они будут точные в 70-80% случаев. Наши тесты показали 75% прибыльных сделок на некоторых валютных парах, что очень неплохо.

Характеристики стратегии для бинарных опционов Binary Options Super Trend

  • Терминал: MetaTrader 4.
  • Тайм фрейм: М1.
  • Экспирация: от 5 минут.
  • Типы опционов: Call/Put.
  • Индикаторы: SuperTrend, Stochastic Oscillator.
  • Торговые инструменты: Любые.
  • Время торговли: 9:00-17:00.
  • Рекомендуемые брокеры: FiNMAX, PocketOption, Binarium, Binary.com.

Установка индикаторов стратегии Binary Options Super Trend в MT4

Индикаторы устанавливаются стандартно в терминал MetaTrader 4.

Индикатор Stochastic Oscillator устанавливается с такими настройками:

  • Период %K – 7.
  • Период %D – 3.
  • Метод MA – Simple.

Индикатор SuperTrend оставляем без изменений.

Чтобы не настраивать самостоятельно график, в конце статьи вы сможете скачать индикаторы и шаблон для данной стратегии.

Инструкция по установке индикаторов в MetaTrader 4:

Правила торговли с помощью стратегии Binary Options Super Trend

Новичок вы или опытный трейдер, правила для вас будут очень понятны. Но основное, что стоит знать, это как определить тренд. Краткие правила для определения тренда выглядит так:

  1. Тренд восходящий, если максимумы и минимумы повышаются.
  2. Тренд нисходящий, если максимумы и минимумы понижаются.
  3. Флэт, если максимумы и минимумы не меняются.

Основной смысл данной стратегии для бинарных опционов в том, что мы будем входить в сделку на откатах по тренду. Именно поэтому не советуем данную стратегию новичкам. Но на самом деле не все так сложно, как может показаться.

Давайте разберемся более подробно в правилах входов в позицию, а позже перейдем к реальным примерам.

Для открытия опциона Call нужно, чтобы:

  1. Был восходящий тренд.
  2. Цена откатила к синей линии индикатора SuperTrend.
  3. Stoch должен быть на уровне 20 или ниже.

Для открытия опциона Put нужно, чтобы:

  1. Был нисходящий тренд.
  2. Цена откатила к красной линии индикатора SuperTrend.
  3. Stoch должен быть на уровне 80 или выше.

Примеры торговли с помощью стратегии Binary Options Super Trend

Для примера была взята самая популярная валютная пара — EUR/USD.

Открытие опциона Call

Как видно на примере, выполняя все правила, можно легко оказаться в плюсе.

Мы видим повышающиеся экстремумы, а значит мы в восходящем тренде. Далее получаем откат к индикатору и сигнал от Stoch.

Сделки стоит открывать с экспирацией не меньше 5 минут, а лучше даже больше, так как разворот не всегда бывает минута в минуту.

Открытие опциона Put

Тут мы видим уже понижающиеся экстремумы, а значит мы в нисходящем тренде. Далее получаем откат к индикатору и сигнал от Stoch.

Заметьте, что не обязательно, чтобы цена касалось индикатора, достаточно нахождения в паре пуктов от линии.

Заключение

Овладеть данной стратегией может и новичок, но перед этим советуем немного наработать навык определения тренда, чтобы допускать меньше ошибок.

В остальном стратегия для бинарных опционов Binary Options Super Trend показывает отличные результаты и помогает купить там, где другие могли бы продавать. Поэтому если вы изучите основы технического анализа и начнете использовать данную стратегию как вспомогательный инструмент, вы обязательно добьетесь успеха в торговле бинарными опционами.

Скачать шаблон и индикаторы для стратегии Binary Options Super Trend

Не можете разобраться как работает эта стратегия или индикатор? Напишите об этом в комментариях к этой статье, а так же подпишитесь на наш YouTube канал WinOptionSignals, где мы обязательно разберем все ваши вопросы на видео.

Что бы оставить комментарий, необходимо зарегистрироваться или авторизоваться под своим аккаунтом.

«Trinity» – New strategy for binary options

Binary traders, especially beginners, are in constant search for new techniques. But the search result in huge collections of strategies is not always profitable, especially if it is assumed to be scalping on M1-M5 timeframes. Meanwhile, professional players and trading signal services, such as vfxAlert, use simple and time-tested combinations of standard tools, such as in the «Trinity» strategy.

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