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Range Trading or Boundary Options

What is Range Binary Trading or Boundary Options?

Range trading (also known as range options, boundary options or tunnel binary options) is a bit more specific trading as trader needs to predict if price of an asset is going to stay in a predetermined price boundaries during a certain period of time. I.e. ‘Will the market price be located In or Out of the range between the target prices at 18:45?’

Boundary Options, Range Options, Range Trading

Example of Range Trading

It starts off similarly as touch or no touch options:

  1. Trader has to select an asset
  2. Define limits (in most cases limits are already offered by a trading platform)
  3. Define expiration time

Predicting a price range is not as simple as it sounds in theory. Once range is selected, it is necessary to select if an asset is going to stay in the tunnel or it’s going to break out.

For example for a stock, price range is set to be 30.5 to 32 for a daily expiration time, with a pay-off of 70% if binary finishes in the range.

Correspondingly, price range is set to be 30.5 to 32 for a daily expiration time, with a pay-off of 70% if binary finishes out of the range.

Range options have another trading type where it’s possible to get up to 350% return on every trade. These type of trades are called ‘High Yield Boundary’ or ‘High Yield Range Options’. These trades are riskier as price ranges are set with less reserve and in most cases it’s less likely that prices are going to stay in these price levels.

In many cases traders are using these options to maximize profits. Using one of these strategies may vary from trader to trader depending on their needs, market volatility and how combinations of these approaches are used.

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