Ladder binary option trading is where range of prices are lined at equal intervals (as a ladder). They are given with fixed pay-off, determined for a specified expiration time to end as high or low binary.
Ladder binary option example
For example USD/YEN trades at 80.2, if a trader wants to invest in ladder binary options with three price levels; 80.5, 80.8, 81.1 which expires at 4 pm, he will have to look at array of trades and its pay-off percentages.
- If Market price comes out to be greater than 80.5 (Market price > 80.5) Pay-off = 30 %
- If Market price is greater than 80.8 (Market price > 80.8) Pay-off = 45%
- If Market price comes out to be greater than 81.1 (Market price > 81.1) Pay-off = 60 %
Thus trader has to look closely at the analysis of the currency spot rates and determine a behaviour in order to select from the ladder expiration options.