Currency Options Available to Binary Option InvestorsCurrency option trading has been opened up to a whole new field of investors with the creation of a new type of transaction called a binary option. In days past the only people able to take advantage of the movement of currency option trading were big fish investors with millions of dollars in capital to trade and use as collateral. Not so any more.

Small Cap Day Traders Trade the Same Popular Cross Rates As Global FinanciersPeople with smaller (much smaller) portfolios now have the ability to make investments in the movement of currency cross rate changes using the binary option trading transaction I mentioned earlier. With as little as $100 an investor can open an account and quickly begin making transactions on the major currency option trading cross rates. Anyone who has ever wanted to trade Yen/Dollar, Dollar/Euro, or Dollar/Pound now has access to the same sorts of options trades that long time forex traders like George Soros have had.

Nasdaq Index, Microsoft, Google Options Also Day Trading on Binary PlatformTrades of this kind are not limited to currency cross rate options however. It is also possible to buy calls and puts on the direction of movement in major stocks and indices, such as Google and or the Nasdaq index. Making investments in these sorts of high return, short horizon securities used to require large capital amounts just to open options accounts.

Low Capital, High Yield, High Turnover and High Reliability Day Trading SystemThese other sorts of stock based binaries are nice but for me the big thing has been the ability to work on currency option trading without the exorbitant capital requirements and without the high commissions and fees that go with it. I place trades in the market, and at the top of the hour I get my payouts. It is pretty simple when you think about it.

Remember, when buying an option, you can only lose what you spend. The problem is the amount of extrinsic in the at-the-money option.

In order for you to profit from buying an at-the-money option, you need the stock to make a move very quickly. Because you have so much extrinsic value, you will be battling against the option?s daily rate of decay.

So, the movement of the stock must happen quickly enough and large enough to offset the amount of money you will be losing daily as expiration draws near.

With this said, the best chance you have to make money when buying a naked at-the-money option is to use it as a short term trade. The longer you hold onto this option, the harder it is for you to be profitable due to the options decaying extrinsic value.

At The Money Call vs. In The Money Call

An out-of-the-money option presents many of the same advantage & disadvantage parameters to the investor. The out-of-the-money option is even cheaper then the at-the-money option which means more leverage and less risk.

However, with a smaller delta, the stock must move much more than either the in or at-the-money options in order for the options to become profitable. Again, we need the option?s delta to outpace the option?s rate of decay.

Now, with the out-of-the-money option, there is less extrinsic value than the at-the-money option so the amount of total possible decay (cost of the option) and the rate of this decay is less than the at-the-money option.

By being further out-of-the-money, this option needs more movement from the stock. As a naked option, this out-or-the-money example is extremely speculative and should only be used naked when the investor feels there is a very good chance of a stock having a large percentage move.

An investor must understand that the odds of them profiting from the purchase of a naked out-of-the-money option is very slim. When purchasing a naked out-of-the-money option, be prepared to lose your entire investment.

Out of The Money Call vs. At The Money Call

Although options can be traded by themselves for directional plays, and can perform well under the right conditions, they are much better used in coordination with stock or other options in formatted strategies which will be discussed in the next section.

While buying naked calls and puts can provide some of the biggest leverage and highest returns, they can also involve the most risk. This strategy should only be used by experienced options traders or traders using risk capital.