News or sentiment traders could have made a lot of money trading binary options on Thursday if they were paying attention to the Euro. When the European Central Bank announced that they would do whatever was necessary to save the Euro, the Euro soared in price against the U.S. dollar in a very short period of time.
With binary options, the goal is not to be right by a lot, but just to be right. With the Euro’s actions, there was plenty of room for this to happen. If you were to open up call positions directly after the announcement took place, you would have been faced with a multitude of tools that would have allowed you to make money. For example, a 60 second option would have given you almost instantaneous profits as the price jumped up considerably in a very short period of time. Because the price only needs to rise higher than the opening price, you could have easily have made money with other types of call options as well. Five minute options and up all would have been profitable because when the price of the Euro increased, it stayed up.
There are some interesting things to be aware of when it comes to major influential announcements like this. Some binary options brokers allow you to open up positions with high payouts if you are trying to go beyond a certain, and sometimes seemingly impossible, price. For example, there is a type of high yield option that says if the price rises above a certain number you will have 300 percent of your initial investment returned to you, rather than the usual 175 percent. This is usually not a gamble worth taking because of the big failure rate, but in the wake of major announcements like the ECB’s, these types of options become more accessible. If you are astute enough to keep on top of the major announcements that will affect currency prices, finding these high yield payouts is an important way to multiply your earnings.
Again, these types of options should usually be avoided since they are extremely hard to make profitable. With a 300 percent payout (or more), people might flock to these, but they quickly learn that losing 100 percent many times in a row does not outweigh the relatively small amount of money that you can make by being correct every once in a while here. High yield options should be normally avoided, but taking advantage of them when you have consumer sentiment on your side can pay off in a big way.
Not all brokers offer these trades and those that do won’t always have them available for the assets you want to trade, so you do need to look out for these. But when you find them and use them correctly, they can help you in a big way.