Statistics on binary options earnings

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker!
    Perfect Choice For Beginners and Middle-Level Traders!
    Free Demo Account! Free Education!

  • Binomo
    Binomo

    Honest broker!

Statistics on binary options earnings

You may have heard, that binary options brokers based and regulated in Japan must publish anonymous statistics of all trading accounts. These statistics can be viewed further here: FinanceMagnates.com. I will summarize it below.

On average, out of 100 binary options trading accounts, 26 profit, which is not a bad number. It means that every fourth trader is profitable. It’s not a big number, no, but it’s definitely a higher number than I would have guessed. So, you might believe now that binary options are not a scam and every 4th trader actualy makes money!

And although it might be sad, most of the losing traders support us – traders who earn money. Without them this business would not be possible.

All you need to do in order to be profitable is to learn, learn, learn . That is why I would like to remind you that on our site Binary Options, you can find lots of educational materials, such as free books or articles that I wrote myself from my own binary options trading experience. Perhaps the most important articles can be found here: Technical Analysis Series.

Another thing that we can not ignore under any circumstances is the psychology of a trader and his money management. For example, I have written some articles about the money management of binary options. and in the future, I definitely intend to pay more attention to this topic and to write further articles, because it really is one of the most important factors.

Author

More about the author J. Pro

Unlike Stephen (the other author) I have been thinking mainly about online business lately. I wasn’t very successfull with dropshipping on Amazon and other ways of making money online, and I’d only earn a few hundreds of dollars in years. But then binary options caught my attention with it’s simplicity. Now I’m glad it did because it really is worth it. More posts by this author

Trading Earnings with Options

E arnings season started this week with a bang, with JPMorgan (JPM) and Citigroup (C) announcing positive results that sent the market trading higher. Next, came a few transportation stocks and the first of the major components of the Nasdaq-100 (NDX) — Netflix (NFLX).

Knowledge of corporate earnings, and what to do during this time frame, is critical for traders for a few reasons.

  • Earnings give companies the opportunity to put on display their growth. They can show this quarter over quarter, and year over year, along with discussing their forward projections via their guidance. This provides traders with fundamental data that we can use to stock pick, or select tickers we want to trade options on. For me, I love to trade options on strong fundamental and technical names, along with adding them to my stock portfolio.
  • Earnings are a catalyst that impact the direction and movement of the overall stock market and can cause serious volatility. Announcements can be quite significant, causing major surprises to the upside — or the downside. This can cause some significant price movement. This is especially true when it comes to large cap, heavily weighted stocks. The FAANG’s in particular, move the market, and traders have to be aware of when these reports are happening. This helps traders to know to either trade them, or stay out of their way. The same goes for top weighted products such as Costco (COST) within the Consumer Staples sector (XLP), or Johnson and Johnson (JNJ) and UnitedHeath Group (UNH) within the healthcare sector, (XLV). As an options trader, it’s not a great idea to be heavily long healthcare when JNJ is reporting that day. Or at least, if you are, hope it goes in the direction you want!
  • Earnings provides a trading opportunity in the options world. If you know me, you know I love to trade direction in the stock market. I rarely trade sideways movement. I like to trade earnings in three separate ways. I trade the momentum higher going into a report (the Run into Earnings), the actual report (I just call these earnings trades), and then price movement after the report (2x moves).

Let’s dive deeper and talk about the second one — trading the actual report.

Let me first start off by saying that trading an earnings report is pretty aggressive, as it is a binary event. However, I still combine my fundamentals, technicals and statistics, and use low risk options strategies, and utilize a small portion of my portfolio to do so.

For an earnings trade, I start with the current stock price, and I place my trades directly before the report. This is typically around market close. I then combine the following factors:

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker!
    Perfect Choice For Beginners and Middle-Level Traders!
    Free Demo Account! Free Education!

  • Binomo
    Binomo

    Honest broker!

  1. MMM (Market maker expected move): I want to know what move is expected for this ticker.
  2. Past Earnings Moves: I look at the past 8 quarters and see, on average, how much the ticker has moved on earnings and in what direction. If the ticker has a high probability of moving one direction or another, that is the one I stick with. If it is split, both up and down, as long as it is within a similar range, I will trade it neutral.
  3. Support and resistance: I overlay the MMM and past moves with key support and resistance levels. This is usually a combination of Fibonacci, moving averages, and the Voodoo lines (based off of Elliott Wave).
  4. Key Psychological Values: If this overlap is near a nice, round number — even better. That will be my target price.

Once I have the range I am targeting, based off of the above analysis, I trade this projected move in the options market via cheap butterflies.

NFLX Earnings — A Case Study

The day before NFLX earnings, I bought a long call butterfly for $0.83. This is incredibly cheap for an options trade, at less than $100 per contract. I like these ‘lotto’ type flies for earnings, because it is a binary event. For normal trades, I use butterflies that are more expensive, upwards of $5.00.

In this example, I did not have great Fibonacci levels, but I had prior resistance and a potential pinning strike for options expiration. On monthly options expiration Friday, typically we see large cap names getting stuck and closing (pinning) at a key psychological value. The expected move overlaid with $300, as did the previous moves, and the 300 strike also had high open interest and volume. I was expecting an upside move in NFLX because it has gotten beaten down so badly, and it was a case of, “Anything not terrible will probably be good!” Therefore, I picked an upside butterfly with $300 as my target.

NFLX options chain.

I got the 290/300/310 call butterfly expiring within 2 days. When I paid for it, it was out of the money, which is why it was so cheap. Plus, with only two days until expiration, it also allowed me to get a cheap price.

NFLX surprised on earnings, traded higher after hours, but then came back down to settle around $300. This is where I began scaling out of the trade. Typically, when a ticker trades within the expected move, I look for it to come back where it came from. In this instance, since we also have options expiration this Friday, I was especially looking for a pin. I ended up closing the first half of the position at $2.99, and the second half is trading at $3.70. Not bad for a butterfly that cost $0.83!

This one worked out great — but of course, there are trades that do not work as well. The key here is to study the ones that work perfectly, along with the ones that do not, to continually hone your trading strategy. As for me, this is my ‘lotto fly’ earnings strategy, and I will be using it frequently this quarter for earnings.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Trading Stocks

Trading stock binary options takes some understanding of how stocks behave in order to profit from it.

Stocks constitute one of the asset derivatives that can be traded on the binary options market. Usually, a trader will have access to trade hundreds of stocks, as brokers will list several stocks from the different stock exchanges across the world. A good spread will include stocks from the three American exchanges, the London stock exchange, and the stock exchanges from Germany, Spain, Switzerland, the Eurostoxx exchange (which contains stocks of companies in the Netherlands, Belgium, and other central European nations) as well as stocks from some selected middle East exchanges. This gives traders and unbelievable spectrum of stocks to change.

What Factors Should you Take into Account when Trading Stocks?

In order to trade stock binary options, traders must be conversant with the factors that cause movement in stock prices. Some of these factors are as follows:

1) Market sentiment: if there is a gloomy market sentiment and worry about the global economy, most investors will prefer to hold cash and will sell their stock holdings, leading to a fall in stock prices.

2) Earnings reports: A good or bad earnings report will cause a stock price to rise or fall respectively. What constitutes a good or bad earnings report? A company reporting a loss may look bad, but if the loss is less than a previous loss, this may be viewed in a positive light by investors, leading to increased demand and a rise in the price of this asset. Conversely, profits declared by a quoted company may not necessarily be viewed in good light, if the profits are less, or are viewed as an underperformance when compared with its peers for the period. The trader must have access to historical data to be able to use factors like earnings reports for stock binary options trading. Another limitation to the use of earnings in trading stock binary options is that they are seasonal and can only be used during the quarterly earnings season.

3) Mergers and Acquisitions: A merger or an acquisition is meant to improve the standing and competitiveness of the companies in question, and usually have a positive impact for the companies involved.

4) Government policies: these could have a positive or negative effect on stock prices. For instance, increasing import duties on raw materials for a particular industry could erode the profit margins of affected companies and negatively impact their ability to remain competitive against foreign goods. On the other hand, import duty waivers could enhance profitability of the same companies in question.

How to Trade Stock Binary Options

The first step is to identify in what direction the stock is likely to head after a news release affecting the share price of the company in question. From there, the trader is free to choose any binary options trade type to fit his trade profile. For instance, an earnings report can lead to a sustained response that lasts for many days. In such a situation, the trader can decide to trade the Touch/No Touch option, using an appropriate price barrier while taking into consideration any recent supports or resistance levels.

If there is a particularly strong news release that is likely to cause the share price of a company to spike in any direction, the trader can decide to trade any of the high-yield option varieties. For instance, the sudden announcement by the CEO of JP Morgan about the trading losses recently incurred on its positions is the kind of news release that can lead to a move so hard that it could breach the price barriers of the high-yield option types. It is ultimately up to the trader to determine what kind of trade will suit the news release he wants to trade.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker!
    Perfect Choice For Beginners and Middle-Level Traders!
    Free Demo Account! Free Education!

  • Binomo
    Binomo

    Honest broker!

Like this post? Please share to your friends:
Binary Options Trading Step By Step
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: