What are long term expiry's?

Binary option trading differs from Forex or Option trading as you are renting an asset in a space of time. If that asset passes a stated price at the time of expiration, then you the trader have made a successful and profit able trade. If the asset does not reach the above or below the price level depending on a call or put, then you are deemed out of the money and lose your investment. Most expiry times were fairly close, ranging from 15 minutes to the end of the day, and very few extended to the next day.

This is thought of as one of the many benefits of trading binary options, but it also limited a lot of variables and other types of trades. These limited choices, helped keep binary options trading simple, but limited choices, which Forex and option traders found very profitable in other types of platforms.

As binary option grew and started to attract a wide variety of investors and traders, new and more advanced methods of trading had to be added.

The old industry adage was "buy at the bottom and see at the top" was difficult to do in short periods of time. Traders wanted the advantage of buying now to sell later, so they could take advantage of bottoms and tops of the markets and also seasonality or market shifts.

To do this, they needed expiration times, much farther out then the end of the day, they wanted end of the month and end of the year opportunities.

Well after a long time of testing and development, iOption has been able to develop "Long Term Expiry" trades allowing their traders to choose expiries at the end of each month or at the end of the year.

Are these new expiry dates available on all assets?

These "Long Term" dates are not available on all assets, but on the most popular currency pairs, commodities and stocks as well as the new Cross Market Assets.

Where do you find these expiry's ?

When you enter the iOption trading floor, and select an asset you will see the expiry dropbox menu, click the menu and the expiries will all be listed simply select the date of the expiry you want. It is that simple.

What are the benefits to long term expiry's?

There are several advantages and benefits to long term expiration times.
1) Seasonality
2) Buy Low Sell High or the Reverse Sell High Buy Low
3) Hedging
4) Trading Strategies.

1) Seasonality

Seasonality is a predictable change that repeats every year at the same period in time. For example, you may not have realized that in eight out of the past 10 years (between 2000 and 2009), the U.S. dollar fell in the month of May against the Canadian dollar. Or that in eight out of the past 10 years, the U.S. dollar fell against the Japanese yen in the month of August. There are no guarantees that historical patterns will repeat themselves but whenever a pattern has been repeated 80-90% of the time, it becomes statistically significant – and that can be very valuable information when you are trading. In this article, we will talk about why seasonality is an important concept in the Forex market and why it should not be ignored. But this applies elsewhere and is more easily traded.

Gasoline has specific seasonality, gas prices and therefore crude prices, peak in August as driving is at its highest as most of the world is traveling on vacation. Therefore you can enter a trade in crude oil, when it is very low, anytime earlier in the year when it is at a bottom, to expire in August.

Another example is Natural Gas that fluctuates on temperature demands, Summer NG climbs, in the dead of winter Natural Gas climbs. Otherwise it is pretty static. So in April when NG declined to a 10 year low, of 1.92 you could have entered a trade to close in the heat of the summer. To learn about energy seasonality visit the Energy Administration website.

Now these are just examples of seasonality.

2) Buy Low sell High

This is the old standard of the stock market and all trading. With binary option you were never before afforded the ability to implement these kind of trades except in short windows. Now whenever you read about a stock, a commodity or a currency hitting record highs or lows, you can enter a trade to close at a later time when the market has been able to return to its normal trading range. Take advantage of fluctuations in the market.

An easy to understand example is the USD/JPY which just a few short months ago was hitting lows that dated back to post world war II. It did not matter how far out you entered a trade, a good trader knew that within a short period of time, that markets would return to equilibrium. The JPY has been experiencing risk aversion demand at present, trading at 78.00 to the USD, which is considered very low for the dollar, the pair range close to 80-82 but with the European crisis in full bloom, the markets have moved to risk aversion theme. Historically, risk aversion never keeps market prices elevated more than over a short period of time, 8 weeks is a basic cycle, so should see the JPY returning to its normal trading range slightly thereafter. You could lock in trades with expiry's two months from now and continue to lock them in as the USD continues to fall. Since you are trading binary option you only have to be over or under the specified price to be in the money, so as long as your bought or sold at the top or bottom, you will have successful trades.

3) Hedging

Hedging is a trading strategy for advanced or knowledgeable traders which can be adapted to use long term expiry's for excellent profits. The way a binary option hedge protects you is that it allows you to trade the opposite direction of your initial trade without having to close that initial trade. It can be argued that it makes more sense to close the initial trade for a loss and place a new trade in a better spot. This is part of trader discretion. As a trader, you certainly could close your initial trade and enter the market at a better price. The advantage of using the hedge is that you can keep your trade on the market and make money with a second trade that makes profit as the market moves against your first position. When you suspect the market is going to reverse and go back in your initial trades favor, you can set a stop on the hedging trade, or just close it. This is a strategy that needs a detailed explanation, if you are familiarly with hedging, then you can easily adapt it. Or you can attend our webinar on Long Term Assets and learn how to apply a hedging strategy for binary options.

But imagine you can enter a long term trade at a low price, and you can continue to add short term trades to the original trade, if the market begins to move the other direction against you, you can enter reverse trades to lock in the current profit of your original trade. Think about it a bit.. and then enroll in the iOption Academy for our Advanced Course to learn about Hedging. Ask your Account Manager for an invitation to the next course or webinar.

4) Trading Strategies

The available of long term expiry's give you the trader, the ability to build and develop your own personal trading strategy. By providing more trading techniques and tools, iOption offers you more "tools for your toolbox" and therefore offers you a wider variety of trading stypes and methods allowing you to be the architect of your own trading strategy. This will make you a successful and profitable trader and that is what iOption is all about, helping you to be the best trader you can.