Pair Option Trading

Pair options trading first came into the limelight in 2010, when the stock pair was launched. Since its inception, it has gained unmatched popularity as well as wide acceptance among traders in South Africa as well as the world. This popularity brought about a software dubbed pairs trading software that seemed better than the stock pair platform. Most of the renowned binary options brokers have amalgamated their binary options boards with some capability of pairs trading.

IQ Option has proved to be a reliable binary options trading partner in South Africa. This is because most of the traders rely on the information availed by the site so as to be able to know the most profitable pairs to trade-in.

South African Traders are used to doing technical analysis or at least using the related reliable information presented by IQ Option. In this analysis, market sympathy and market forces are somehow eliminated as a trader looks to decide on where and what to trade. A trader in South Africa is said to be trading in a neutral market strategy. Pair options trading is one of the finest strategies that helps traders to achieve the neutral market strategy. Pair option trading allows a trader to get returns in both down and up markets without necessarily having to commit a significant amount of investment or capital.

The strategy best fits traders in South Africa who have some special bias towards a given stock while remaining nervous about the shakeups in the market. Such traders are hesitant to risk a given amount of capital, and they want to remain on the periphery as far as the bet is concerned. With IQ option, South African traders are guaranteed of some return or minimal losses since there is an expert market analysis that is provided to them.

This is a direct and simple way of trading through the use of predictive performance of profit and stocks. It enables traders in South African to predict the stock that has the highest probability of performing better when paired with one another. If a trader selects a stock that performs better, it is a guarantee that such a trader has a payout in return. The payout is done when a trader varies with a given pair, market conditions and the type of option.

IQ Option helps traders by giving them invaluable financial advice to ensure that they receive the payouts. Pair option trading removes most of the worries and anxiety from the traders’ mind, especially on general market inclinations.

It is possible to profit even in instances where the market is down. This is because the pair option value is affected by the out-performing and under-performing stocks. Even if a trader chooses a stock and it went down, money management with pair options trading assures the trader of some returns since that is dependent on the performance of the other stock.

The pairs involved in pair option trading are analysed and a correlation of the pairs is availed to traders. IQ Option gives this as a percentage. An ideal market environment gives a 100% correlation. In reality, a trader will never see such an occurrence since a perfect market never exists. 100% correlation insinuates that an upward trend in the price of a given stock makes the other stock to move in a similar manner.
The other extreme end of the spectrum is that the stocks can never have a correlation; at this time the correlation is 0%. Such an instance occurs when the stocks move in the opposite direction to the market all the time.
Correlation is significant in picking the option that a South African trader will trade on since it helps to predict the nature of the market and monitoring the factors that make the market behave in a certain way. If a trader in South Africa sees that two assets that historically correlate with each other, are now starting to deviate from each other, then this is the crucial time to trade.
The neutral market strategy, as outlined by IQ Option, seeks to help traders reap maximum benefits from the correlation analysis. Once an investor realises a break in the normal movement of two assets that have a high correlation, it is of the essence to have a put option on one asset and to place a call option on the corresponding asset simultaneously.

All the types of pair options contracts have some fundamental characteristics in common, which make them assume the name “pair options”. Pair options trading, according to IQ Option, is the easiest mode of trading for a pair of essential assets. More often than not, a majority of the assets that are paired are picked from a common sector.

However, this may not always be the case. The only issue that needs to worry a trader in South Africa is the relative performance, making pairs trading a neutral kind of trading. The simple interpretation of this is that the market conditions are not inconsequential to the performance of the options that a South African trader chooses.

The majority of the binary options traders can attest to the fact that binary options trading is an effectual way to realise maximum profits and also to minimise the losses. Moreover, a trader who is proficient enough in binary options trading is not prone to hefty losses since he or she knows when to exit a trade and when to enter. Trading in pair options involves trading in opposite directions whether using similar assets or different ones. Pair trading strategy has similar effects to the straddle effect even though pairs do not have to be of similar assets. This makes pair trading a strategy on its own.

The profits of a trade are protected
The risks of the trade are minimal
The income that a trader anticipates could be doubled.

The pair options trading strategy can be applied to various asset types such as stocks, commodities and forex. A trader in South Africa can trade on a singular asset or multiple assets. Pair options trading can be summarised in two approaches depending on the type of asset that a binary options trader wishes to trade on. The two approaches are competitive and single-asset pair trading. Single-asset approach makes use of a put and a call option on a singular asset at dissimilar times while the competitive pair options trading buys a put and a call option on two rival companies.

Even though the two options are simple to comprehend for any trader in South Africa, there is a need for thorough research, more so for competitive pair approach. An exploration of each approach is given below.

A trader in South Africa can apply this strategy to any asset, but it works better when used on commodities and forex. The pair trades in single-asset pair trading are executed at dissimilar times, but the time of expiration has to be the same. This gives a binary trader a chance to minimise losses and increase profits and possibly to double the expected amount of profit.

The amount invested and the time of expiration must be the same for the two trades so that the strategy can work. Most of the South African traders have executed this strategy in their quest to ensure that their investment bears a positive outcome. The barrier that the strategy creates makes it simple for a trader to enjoy maximum returns while at the same time, cushioning the trader from suffering losses.

This strategy has also been given the name Competitive Relative Value (CRV) trade strategy. It was developed so as to help traders in South Africa to benefit from movements in prices of two companies stocks. The two companies compete with each other and they also operate within similar sectors of trade. Some of the companies that make use of this strategy are JPMorgan/Goldman, Shell/Exxon and Apple/Samsung. All the parameters of the trade, such as original investment and expiry time, should be similar so that the strategy can have maximum impact.

While most of the first-time traders are used to the antique mode of binary trade, most of the contemporary binary options brokers have geared up to offer more than just binary options. This is seen as a move to increase popularity amongst traders. The exotic binary options types: early close, ladders, and pairs are some of the basic trading principles that a trader in South Africa should know so as to have a little more assurance.

Since most of the newbies in binary options trading may have a few hick-ups somewhere along the trade, IQ Option comes in handy to offer the much-needed advice. This gives such South African traders a chance to evade some pitfalls, which could result in enormous losses.

• Pair options are neutral regardless of the market performance, meaning that a trader can have returns even in the event of a downward trend in the market.
• Money management with pair options trading is based on comparisons only, and it is only the comparative performance that counts.
• Traders have absolute flexibility through pair options. It is okay to close or open a position at any time. IQ Option is known across South Africa for giving good advice on when to leave and take the profits or to reduce the losses.
• The pricing of pair options has no hidden costs; everything is transparent. The absolute loss that a trader can make is limited to the price of the option. And payouts made to traders are updated continuously throughout the trading hours of the market.

Money management with pair options trading is one of the specialisations of IQ Option. A trader is better placed to understand and trade since the professional advice given by IQ Option makes it simple for traders to know when to trade and when to exit the trade. South African traders make minimal losses in pair options trading. The relative performance of a stock is weighed since the trader purchases an option. This is what traders in South Africa call option start time.

The expiry time of the trade is set to be between an hour and 5 months from the date the stock was purchased. A trader can get as high payouts as 86%. Money management with pair options trading is an almost guaranteed method of trading in South Africa.

It is not possible to fail in both the parts of the pair. But there are high chances of getting high returns on either of them. A unique benefit of pair options trading is that a trader rarely loses regardless of the market direction. IQ Option allows traders to access the stocks that have a reliable correlation between them. Moreover, the traders are led through an in-depth discussion and analysis before deciding where to place their trade for maximum benefits. With IQ options, traders in do not just trade. They trade with a high degree of confidence that they will realise a handsome profit.

Pair options trading has its own ups and downs just like all other styles of trading. It is not a 100% assurance that it is the best. The use of a mathematical correlation between two stocks or more is the backbone of pairs trading. The relationships that exist between various sectors of trade are analysed through the use of probabilities, statistics, technical analysis and fundamental operations.

It is critical for a trader to try and establish a strong correlation that could exist between various financial instruments so as to be able to analyse further and make an informed decision. Successful traders in South Africa have always found advice from the analysis given by IQ Options valuable. Trading in South Africa always puts traders one notch above the rest since there is a backing of expert analysis with them.