Originally posted by M. Hodges Click here for the full strategy review
One Touch options are a high yield investment vehicle created by the binary options trading community. The One Touch options deliver some of the highest returns but also come with some of the highest risk. One touch options, at least the ones offered by Anyoption, are weekly expiry options you buy over the weekend. Even though the options only require “one touch” to be profitable this really means that the options have to close at or past the strike level at least once during the week. If, during the course of the week, the option closes at or past the strike level you receive the maximum payout, if not you lose the entire investment.
What is hedging?
Hedging is a technique and strategy that traders use to offset potential losses. In commodity trading businesses and individuals use futures
contracts to hedge against sharp increases or decreases in the prices of raw materials. In stock trading investors may hedge using options or some other derivative instrument. With One Touch options I recommend using another binary option as a hedge. By doing this you can greatly reduce the potential losses associated with the trade and enhance potential returns.
The Final Conclusion
My final word…One Touch options hedging is a strategy that I will be using. I think it will be best deployed when the markets are trending strongly. When the markets are range bound or otherwise hindered there are other techniques with better risk reward profiles.