Pump Up The Volatility With Nadex Binary Options

When the markets are insane, you have two choices. You can decide that it is too much volatility and you back off and choose not to trade. Or you can jump in with gusto and love the volatility! Darrell Martin talked about implied volatility on the Tom O’Brien Show on October 15, 2014.

O’Brien mentioned that the markets were down that day two percent in the United States and down between two point eight (2.8) and three point five (3.5) percent in Europe. Martin talked about the market moving three deviation levels and how there is a 0.3 percent chance of that happening. In speaking about Implied Volatility, they mentioned that the VIX (the Volatility Index) broke the high of three years. Unless you are a day-trader, right now is a very dangerous time to trade. This is not a time to dip your toe in the markets.

Because binary premium goes up when the VIX goes up, there is premium everywhere and that makes it an ideal time to trade Nadex binary options. The most important factor in all option trading is the Vega or the implied volatility. More than anything else, implied volatility has the biggest impact on any kind of option you trade.

Martin has taught many times about it being the “Premium Collection Season.” Implied volatility pushes all of the prices toward the center of the strike prices. You want to be able to sell high volatility and buy low volatility, but the market keeps flying up making it challenging to be able to grab those trades!

Martin said during the commercial break, he went up three strikes on US Small Cap (e-mini Russell 2000). He bought at $80 and they had already gone up to $95. This trade was eight points ITM (In The Money) with 25 minutes to go.

He then analyzed a trade on EUR/USD. To view image click HERE.
 

The trade was 20 ticks ITM and could have been bought for $80. It would have to move 20 ticks against you, but you could set a stop loss and get out at $50 for a $30 loss, $20 profit. If it stays flat, or moves down 20 ticks or flies up, you make money. All three! In a volatile market, you can actually make money in three directions and it’s a lot easier because the strikes are further away from the current market.

Be sure to wrap your head around all of these concepts in demo trading first and make sure you understand the volatility. It is definitely something, if understood, that can be used to your advantage.

If you would like to understand more of the benefits of trading Nadex binary options, go to www.apexinvesting.com, a service provided by Darrell Martin. Apex Investing Institute offers free education, and free access to the Nadex Binary and Spread Scanner Analyzers. Member traders are invited to trade in the chat rooms, take advantage of trade signal services, have key indicators and access the Apex Forum. The forum content is updated daily and includes over 8000 members. In a supportive learning community of seasoned as well as up and coming traders, traders of all levels learn how to trade Nadex binaries and spreads in depth, as well as futures, forex, stock and options, and gain an edge for successful trading overall.