So, what is range option trading and how does one approach it?
A key factor to remember is that boundary binary options and range binary options do not solely involve trading within a fixed time frame, but also revolve around speculating on if an option will expire with a market rate within a particular extent of values.
Boundary binary options & range binary options are different to ‘classic’ high/low binary options which exclusively revolve around speculating on whether an underlying asset’s expiry rate will be superior or inferior to the underlying asset’s strike rate.
Both trading features are similar in some aspects: they both operate within a set timeframe, have a predetermined payout rate in case of a winning trade, and traders lose the investment amount for both trading types in case the trade is Out Of The Money.
Some binary options brokers will offer traders a chance to exit the trade before the expiry time so as to minimize losses in case the traders think that the option will inevitably expire Out Of The Money.
Let’s take a look at an example of a trade involving boundary binary options & range binary options:
A trader places a trade with a strike rate of 1.5688 and chooses a range varying between 1.5704 and 1.5675. In order for the trader to win this trade, the asset must expire within the aforementioned range – if the asset fails to expire within that range, the trade is Out Of The Money and the trader loses.