Options and Binary Options Knowledge & Tips by Pierre A Pienaar Effects of Stock Price on the Time Spread Binary Options - How can anyone predict market movements over short or long time frames?

1. Options and Binary Options Knowledge & Tips by Pierre A Pienaar
Options
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Effects of Stock Price on the Time Spread
The price of a time spread fluctuates with movements in stock price. A time spread is at
its widest when the stock price and the strike price of the spread are identical or at-the-
money.
As the stock moves away from the strike in either direction, the value of the time spread
decreases. As the stock moves in either direction from the spread’s strike, the closer
month will experience a quicker price change due to the front month’s higher gamma.
Gamma shows the rate of change of an option’s Delta in relation to movements in the
price of the stock. It is the Delta of the Delta! Gamma is highest in at-the-money options

2. and in the front month. It decreases as you move away from the at-the-money strike
and as you move out over time.
In the same way that a time spread loses value as the stock price moves away from the
strike price, the opposite holds true. As the stock price moves closer to the strike price,
the value of the time spread increases.
Examine the June / July 65 call time spread. With the stock priced at $65, directly at the
strike, the spread is at its widest point or highest value. As the stock climbs from $65
and pushes toward $70, the June / July 65 spread loses value.
At the same time the June / July 65 loses value, the June / July 70 spread gains in value
as the stock approaches the 70 strike. When the stock reaches $67.50 the point
equidistant (mid-point) between the two strikes, both spreads will trade at
approximately the same value.
Look at Chart 2. Notice that as the stock increases from $57.50, both the June / July 65
and June / July 70 spreads increase in value. Their increases continue until they reach
their strike price at which time they both begin to lose value.
This demonstrates that the spread with the strike price that the stock is moving toward
will increase in value. Meanwhile, the spread with the strike price that the stock is
moving away from will simultaneously lose value.
Chart 2 follows the effect of the movement of the stock price across the two time
spreads.
Source: Options University

3. Binary Options
How can anyone predict market movements over short or long
time frames?
Analysis of the financial markets can assist traders as make that important decision
between up and down. By conducting their own analysis, or using reliable trading signals
from professional analysts, the beginner trader should be aiming to trade in-the-money
around 70% to 80% of the time. Technical analysis is one of the two key methods used
by financial analysts to evaluate the markets and predict price action in the future. This
method of analysis involves the use of graphs, charts and statistics, all of which enable
analysts to spot patterns. It is these mathematical and statistical patterns which can
indicate future activity.
This brings the expert traders to the primary principle on which technical analysis stands:
history tends to repeat itself. The sentiment is as true in market activity as in general life.
The repetitive nature of price movements is generally attributed to the fact that market
participants react consistently to similar market stimuli over time. Furthermore the very
price of any underlying asset follows trends. Once a trend has been established, future
movement is more likely to move in the same direction than against it.
Binary Options trading is a great way to trade on a wide variety of financial assets. Once
a new trader has learnt the basics and formed a basic strategy he will soon be able to
make high profits from trading the financial markets using binary contracts, even if he
has never traded before.
Basically newcomers need two things when they’re beginners and want to be successful
in trading Binary Options:
They definitely need a good strategy and they need to find the right Binary Options
broker which is always the hardest part of the challenging quest to high profits.
Source: Banc De Binary
News
Banc De Binary gets CySEC license

4. * Aims to reach 500,000 accounts by end-2013 *
Banc De Binary, the first binary options firm to secure a trading license by the Cyprus
Securities and Exchange Commission, has set an ambitious target to double its current
client base to 500,000 accounts by the end of 2013.
Oren Laurent, chairman of the online investment house that has operations in four
countries, said Banc De Binary currently employs 230 people and plans to open an office
in Nicosia to
complement its
Limassol operations.
Trading on Banc De
Binary includes 90
assets in commodities,
currencies, indices and
stocks, which Laurent
believes will very soon
outpace the online
forex trading
companies.
“Half of the Fortune
500 companies were
established in times of
crisis,” he said, adding
that plans for Banc De Binary include expansion to Asia and the Australian markets.
Laurent explained that in the case of binary options, the profit and loss markers are
ensured in advance, but that regulation was still slow kin some countries, which is why
he is pulling out of the U.S. and will use his CySEC license to secure a pan-European
passport.

5. Taxation, too, is still a bit fuzzy, but Banc De Binary plans to stay here until new rules
kick in.
Meanwhile, the five different types of accounts, starting from the basic 500-dollar
account and going up to the 50,000+ VIP account, are generating a revenue stream of
about 100 mln euros, which is also contributing to the Cyprus economy, Laurent said.
Source: Banc De Binary
Trade smart, not with Greed
Pierre A Pienaar
Pierre A Pienaar retired in 2011 from business.
I would like to share my passion, my interests, knowledge & experiences
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