Originally posted by Bogdan G on bots.com school. Click here
for the full review.
How does a Strangle work? Binary Options
Is this powerful strategy reserved just for Vanilla Options traders? I sure hope not as I really want it to work for Binaries also. Just when I was about to give up and conclude that the Strangle cannot be used for binary trading, it hit me: the answer must be Touch/No touch binary options. With Touch/No touch trading you bet that price will reach a certain level before expiry time. So to make the Strangle work, we will chose a Touch option for a higher level (strike price) than current price and another Touch option for a lower level than the current price.
Wrapping it up
Using a Strangle for Binary options trading might prove to be profitable, but there are still a lot of questions to be answered and I think the most important one is “How far away from the current price can I set my Touch Options?” If the broker just offers Touch Options that are very far away (800 – 1000 points) from current price, that will increase the possibility of both my trades to end up losing. To make the long story short, the success of the Strangle in the form we talked about is highly dependent on the conditions that a specific broker offers.