Joint stocks options
Stocks are considered to be a very popular kind of assets in world financial markets for a long time. In particular, a financial market, where deals about purchase and sale of joint stocks are closed, is called stock market. In a stock market, except joint stocks, much more kinds of securities circulate, such as: loan securities, bills of credit, certificates. However, for binary options trading, traders are given the most popular kind of securities – stocks. A stock trading was started in 19 century and isn’t stopped till nowadays. Of course, such kind of financial assets was included by brokerage companies in trading terminals of their clients. The popularity of this asset can be explained by the following factors:
- less volatility and more probability of motion prediction, in comparison to other exchange products;
- less perceptibility to economical news expansion;
- more liquidity in comparison to some other kinds of financial assets;
On the screen you see stocks of Hewlett Packard company with vivid trend line and motion prediction.
In connection to all above enumerated factors, professional traders and investors, stocks have been using as one of the main element of investment portfolios for a long time. The usage of stocks in binary option trading, in its turn, lets traders bring diversity in to their own trading and increase profits of many trading strategies.
Nowadays, stocks options are popular exchange market product, which is used by traders form all over the world. This financial instrument, taking into consideration its motion prediction, suits better to trading of the most profitable types of options, and it is suggested that you will get profit after the price reaches strike-levels and may be comes to 600%.
Let’s point out the following characteristics of stocks options:
Strike price – the given level is applied by an investor or brokerage company as a price orienting point, which must be reached by stock price for the certain period of time. The exacter prediction of this level is, the more profit you can get from the trading.
Option type – PUT/CALL. PUT options give their trader the right to make stock selling, if the trader thinks that asset price will fall down, but CALL – gives the right to buy. Type option choice depends in every case on the situation in the market. If, according to a technical analysis, we observe, for example, outbidding of AXIS BANK stocks, we make a trading decision to sell them - PUT:
If the price, for example, BANCO SANTANDER is in the zone of outbidding, we make a decision to buy - CALL:
Expiration date – fixed time, after the end of which, the result of trading operation will be fixed, and a trader will get profit or loss.
Stocks quotes price formation
A lot of factors influence on stocks price. Let’s enumerate the main factors:
- the results of financial-economical activity of a company, which emitted these stocks;
- worsening or improvement of financial-economical background in the state or in the certain economics sector;
- news background.
Trading tactics in binary option trading on stocks
As a rule, the given financial asset is used by the main market participants in the following types of trading:
1. Diversification of risks of financial assets portfolio, where there are companies’ stocks from different countries and economical branches.
2. Purchase and sale of stocks, according to fundamental news of the following type:
- development or fall in economical branches, a company is related to, which issued shares, for example the crisis of cars market in the USA, which led to GM bankruptcy;
- the information getting about the results of financial-economical activity of a company, which emitted shares.
- indicated trading strategies, which are based on technical indicators, being a part of a set of trading terminal supply;
- mathematical trading strategies, which are based on multiplication of trading lot size, and also on the usage of other mathematical algorithms;
- simple trading, using price patterns according to Price Action type.