A few brokers have introduced what are called boundary options or range options. The boundary option is basically a play on volatility. Will the asset stay in the range or will it move outside of the range.
The profit on a boundary option is 70%.
Trading high impact economic events is the lifeblood and thrill of both amateur and professional traders. A trader has the ability to make more money in one hour than an entire month. The risk of trading such market moving events is not getting whipsawed in a trade that reverses. While this is usually not a great trade due to the calm nature of the Forex markets, during a major economic event this option becomes a real profit center.
The spread on boundary options are currently very narrow which is great for traders looking to profit from a move outside of the boundary. The boundary option is available on the $EUR/USD, $GBP/USD, $AUD/USD, $EUR/JPY & $CL_F (OIL). The spread is currently 6 – 12 pips which any Forex trader knows, is very small for betting on a move outside the boundary, when a high impact event like the jobs report or interest rate decision is announced.
Bookmark the economic calendar to check for the next event to trade.
These Brokers Have Boundary Options.
Another favorite trade for boundary option traders is the weekly oil report at the Nymex. US Crude Oil Inventory is released on Wednesday. This is the announcement that tells oil traders about supply and demand in the US oil markets. Although there are geopolitical events all the time, when traders are looking to remove the noise and focus on data, this is the report they read.
Traders can use the boundary option trade to also trade the oil inventory report on Wednesday.
As always, it is important to follow proper risk management so that you do not blow out your account. This trade has a probability for certain announcement and traders need to understand that there is no such thing as a holy grail.
Trading any type of option, be it binary options, monthly options or weekly options requires research, planning and education.