Market Overview

Think Energy Has More Downside? Here Are Two Ways To Play It

  • Energy assets, especially crude oil, are in the news every day, almost all the time.
  • Energy markets are innately volatile due to the direct impact that world events can have on supply, Nadex explained.
  • This year was particularly tough for these sectors. Oil, in particular, had a terrible year on the back of a substantial oversupply.

Do you think oil and gas will continue to decline? Or do you believe there’s a rebound right around the corner?

Whatever your thoughts on the issue are, binary options might offer an interesting way to play the events with relatively low collateral.

Related Link: Holiday Jobless Claims: Is There A Binary Way To Play?

What Are Binary Options?

Investing 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,” binary options trading site Nadex says.

How To Trade Oil With Binary Options

Via binary options, traders can take action on the results they expect, with limited risk. Below is an example of how to trade energy (in this case, oil) using binary options.

Related Link: Hedge Funds Are Buying Gold, But How Can 'Average Joe' Capitalize?

In the following example the underlying crude oil future is trading around $99.50.

A standard Crude Oil Binary Option may look something like: Crude Oil (Jan) > 100.50 (2:30PM)

For those who think that the crude oil future will trade below 100.50 at 2:30pm, selling this Binary Option may be the way to go.

On the other hand, those who believe the crude oil future will trade above 100.50 at 2:30pm could buy the Binary Option.

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


Related Articles (OIL + USO)

View Comments and Join the Discussion!

Posted-In: NadexShort Ideas Commodities Options Markets Trading Ideas