So, binary option “ladder” (also called stepwise option) is a variant of the classic option “above / below”. When using the option “up / down”, you define the direction of price movement – up or down – in accordance with the purchase Put or Call option.
Then you set a deadline and podostizhenii option expiry of this period, or get a set profit if your prediction was correct, or commit a loss if the price has gone in the opposite direction.
When using the option “staircase” you have the possibility to set different levels above or below the price which must be before the expiration of the expiration. Depending on the distance from the level of the strike price of your total income will be credited.
Thus the option “ladder” is like a series of oprtsionov “up / down”, where you can fix a certain profit after kazhny achieve a certain level of price. Profit vyschitivaetsya as the difference between the different levels and the option strike price.
To better understand the operating principle of “staircase” option let’s look at it as an example. Suppose the underlying asset Gold is currently trading at 1300.
Do you suppose, after careful study of the market, in the near future the price of the underlying asset will go down and will be reduced up to 12 hours of the day. However, you are not sure how much below the current price could drop the price level – it may be 1.295, or 1288, or even 1275 with strong momentum moving.
In this case, you can use the binary option “ladder.” You buy a binary Put option on gold at the strike price 1300 and expose term expiration 12 noon.
Now, if the price is up to 12 hours reached the level of 1294, ie. E. The first left a certain level, then you say, get a 25% profit. If the price has crossed the second level in 1288, your income will be over 40% of the profits. If the movement was really strong and up to 12 hours of the day the price fell below the level of 1275, your income will be 80%.
The number of levels of levels, as well as the level of income at the intersection of each level is set by the broker. Also, some brokers offer options of “staircase” option where you can put different expiry dates for each price level.
In general, the option “ladder” is considered one of the most profitable types of binary options. However, in order to use it successfully requires knowledge and experience of trading in the financial markets.