Fundamental Knowledge (4) There are three types of trading styles
IG Securities' Nikkei 225 Binary Options: trading styles can be categorized into the following three types.
Trading styles are categorized by how the options are settled.
1. Auto-settlement at market close
This is the most normal trading style.
Purchases and sales of Ladder Options, sales of One-Touch Options, and purchases of Range Options fall under this trading style.
For Ladder Options, a buy is a win if the closing price is at or above the settlement price, and a sell is a win if the closing price is below the settlement price.
Conversely, a buy that closes below the settlement price or a sell that closes above the settlement price results in a loss.
Selling One-Touch Options at the close is a win if the price never reached the settlement price at any time during the day.
Buying a Range Option is a win if the price remains within the range for the entire period.
2. Auto-settlement during trading session
This is a somewhat special pattern.
One-Touch Options and Range Options apply here.
For One-Touch Options, the moment the Nikkei Average reaches the settlement price, auto-settlement occurs, resulting in a win for buys and a loss for sells.
For Range Options, auto-settlement occurs the moment the Nikkei Average moves outside the range, resulting in a win for sells and a loss for buys.
3. Interim settlement during trading session
Any type of option can undergo interim settlement.
If you hold a long position, settlement is at the current option selling price; if you hold a short position, settlement is at the current option buying price.
For example, if you hold a buying position with a break-even at 20 points and settle at a selling price of 50 points, you gain 30 points. Similarly, if you hold a selling position with a break-even at 80 points and settle at a buying price of 50 points, you gain 30 points.
During trading, the buying price for options is higher than the selling price (there is a small spread); to win via interim settlement, you must first cover the spread.
※The spread becomes zero at auto-settlement. The spread fluctuates according to the underlying asset’s conditions.
Foundations (1) What is Binary Options
Foundations (2) How option prices are determined
Foundations (3) Binary Options terminology — IG Securities-specific terms — and how to read trading results
Foundations (4) There are three trading styles
Advantages of Nikkei 225 Binary Options
How to open a demo account
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