Playing The Japanese Yen With Binary Options

• After peaking in 2011, the Japanese yen has been in an almost constant decline versus the U.S. dollar.
• The currency lost almost 1.2 percent of its value this year. However, the Yen has recuperated more than 3.6 percent since its hit its June low below 0.0081 U.S. Dollars. The Asian currency is now worth 1 JPY = 0.0083 USD.
• Is there a way to play it without actually acquiring the currency?

Since its 2011 highs, the Japanese Yen has plummeted more than 36 percent. However, over shorter periods of time, the currency fluctuated substantially, although the general trend points downwards.

For instance, over the first semester of 2015, the Yen's value tumbled more than 4 percent. Over the following quarter, the price was quite volatile, but ended up more than 3.6 percent. In the fourth quarter of the year, the currency fell again by roughly 1.1 percent; Over the past month, it gained 1.3 percent.

A couple of questions arise: Where will the Yen go next? Will it go on to recuperate as it has over the past month, or will it continue in way down? If so, will the decline be constant or volatile? Are there ways to benefit from the currency’s moves, other than acquiring the actual currency?

Related Link: The Fed Raises Rates: How You Could've Played It

Well, binary options provide an interesting alternative.

What Are Binary Options?

Trading via binary options is just that: Playing a binary event. "Binary options are limited risk contracts based on a simple yes/no market proposition like will the markets go up by the end of the trading week," Nadex explained.

Trading Currency Pairs Via Binaries

Nadex offers short-term binary options, "a new way to trade all major currency pairs, offering continuous opportunities in flat or volatile markets, and protection against being stopped out by temporary market spikes."

A classic Forex Binary Option contract may be: USD/JPY (Wed) > 120 (2PM)

In this example, the USD/JPY rate is 120.985.

For traders thinking the USD/JPY rate will stand above 120 by 2 p.m. Wednesday, buying this Binary Option would be the way to go.

For those thinking the USD/JPY rate will stand below 120 by 2 p.m. Wednesday, selling these contracts might be best.

Check out the video below for a quick explanation of how this system works.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.