A secondary offering is when a company releases new shares of its stock after the initial public offering (IPO). As a general rule, binary options brokers don’t participate in the speculation surrounding an IPO as these companies are usually not big named companies yet, but they do offer binary options on larger companies, and these […]
Using News to Trade Binary Options
The weekend is always an interesting time for binary options traders, even those that solely trade stocks. This might not make sense because stocks are not traded on the weekends, but this doesn’t mean that nothing is happening. There is always a lot of behind the scenes actions taking place, and the astute trader needs to keep themselves aware of these things. For example, this weekend will be important within the financial sector, mainly because of what is going on with Bank of America–a very popularly traded binary option underlying asset.
Recently, it was made public that Bank of America was probed by intelligence organizations for improper trading practices. This happened in June of last year, according to reports, but the impact might not be felt until next week–or beyond. The details of what actually happened are unimportant, it’s the fact that negative press like this has the possibility to influence stock price action. Right now, this means absolutely nothing, though. Any sort of trade variance now would just be a kneejerk reaction. It could happen, but it might not. It’s just a probe and nothing has yet come forth in the form of allegations or the like. But if this does happen, you can bet that the Bank of America stock (BAC) will have a huge impact.
Now, for long term stock owners this would obviously be very problematic. But it really doesn’t matter for binary options traders. It’s just as easy to trade a put option as it is to trade a call option, remember. This isn’t like short sales in the stock market where there are minimum trading requirements, plus the use of a margin account. Binaries are perfect for this type of trading because of these things.
This is an important case study because it details exactly how the weekends can be so important. Stock trading might cease for a couple days, but the business itself does not. News still happens on the weekends despite what else is going on. So if you are the type of trader that trades the news–and you should be–you need to always be paying attention. Even if you are a stock trader and even if your asset of choice isn’t officially being bought or sold during the weekends. Things will still happen.
The probe with Bank of America is still an ongoing investigation, so if you ever plan on trading this stock, it is important to keep this in mind. Information may come all at once, or it might come in small doses. When it happens, the stock price will likely feel some sort of jolt, depending upon the current of the news being released. For the most part, it really doesn’t matter if things are true or not, unfortunately. Even an untrue accusation may cause stock prices to drop significantly in a short period. Either way, you need to be prepared. Binary options have no impact upon actual prices since they are not directly connected to the company’s stock, but the stock will still move options. The binary trader needs to know these things and then act prudently and in an educated manner. Put options are just as easy to trade since it’s as easy as just pushing a button right next to the call command, and as such they should definitely be used if they are warranted. Some people have ethical problems with short sales of stock since they can drive down prices artificially, but these simply do not apply with binary options. Instead, they should be viewed as an impartial money making tool, designed to help you profit regardless of market conditions.