Options on indices


Indices – a special kind of financial assets, as they are not similar to any other trading tools. At its core – it averaged data that characterize the entire sector of the economy, ie, the composite index of the value of the consolidated assets of the group.

Indexes were launched in the early twentieth century, the Dow Jones index which – Dow Jones, is still a serious indicator of the economic situation in the different sectors of the US economy, although it is currently heavily modified, updated and propagated to different subgroups.

Today, a large number of indexes and all their indicators are formed in the course of trading on the stock exchanges of the world. According to the agency Dow Jones & Co, at the beginning of 2014, there were more than 3000 stock index. In this case, all the indexes can be subdivided into the following groups:

  • individual – that characterize only one element;
  • summary – characterize the change in the totality;
  • qualitative indicators of the population (eg – 200 similar enterprises in the country);
  • quantitative indicators (for example – cost, prices, labor costs).

Name of the index is composed of letters, such as S & P (abbreviation index) and numbers 500, which indicates how many segments the group (in this case, high-tech enterprises) included in the index itself. Thus, the change in quotations index means is a change in the total economic indicators of all segments of the selected group.

Given the vast number of indexes, it can be concluded that in them instead of literally all the groups of producers and consumers, sectors of the economy, price, etc. indicators that at all possible to generalize and evaluate the same way. In general, indexes are used to major market participants, more than as indicators of change than traded. At the same time, the introduction of the index in the binary options trading technology, has allowed traders to profit even with this kind of exchange of the product. Since indexes accommodated in the trading platform for traders, as financial assets. In fact, why not? After all codes, just have the quotation in time and space, and quantified may serve to trayderov a commodity like stock or currency pair. Why ratings?

  • major indexes are valued by market participants because of their informative, as they show the changes are not of one company, and the whole group, which includes, at times, more than 500 units, which allows a more objective analysis of the current economic situation in the country;
  • indices are used as a hedge and help prevent the risks of obtaining the pair trade multiple instruments, or a portfolio of assets, which may include other types of financial assets.

Options on indexes. Main characteristics

Strike price  – typical for trading indices. It is the financial asset, the most used in options trading «ONE Touch» and «Range» conditions for profit which is the achievement of specified price levels. This is due to the fact that the movement of the index is inert and, in fact, they are less agile than others. Thus, the change in the economic situation in the country, will not be able to quickly influence the direction of movement of the asset, which “can not” fast turn around and change direction.WARNING!Trading binary options involves a high level of financial risk.If you are a beginner – or useinsured transactionsor freedemo account.Type the option  – “Up” and “Down» – PUT or CALL. It is another basic condition for trade index. Thus, the trader, for the conclusion of the transaction, decides to buy or sell the subject of the transaction. For example, if a trader has revealed FRANCE 40 on the index upward trend, he decides to purchase «Call».
At the same time, if a trader noted that the IBEX 35 index will continue downward trend – it is a deal for sale – PUT.

Trading Strategies binary options on indices

The indices currently are in the same asset as currency pairs, commodities or shares from the stock exchange.In this, the indexes apply the same trade strategy as the other trading instruments. Thus, most professional traders use clumsy indexes as a tool to hedge the already opened positions. In addition, the indices include portfolios, by doing so, bet on the yield of more than one enterprise and the entire industry. In addition, modern traders use indexes to trade indicator strategies, as specified tool provides more accurate signals than others instruments. The indices are suitable for use in the trade of mathematical strategies, due to the fact that their clumsiness, gives the trader some assurance in the application of animation commercial lots. However, unlike other tools, to indices practically apply foundations of Price Action, enabling trade on a clean chart.

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