Reducing the Risks with the Straddle Strategy

We have previously explained how any Forex trader can use the “straddle” strategy in combination with binary options, to earn a double profit. The ease of making such enormous returns is only one of the reasons that this strategy is the top recommendation from the many Forex brokers.

Nevertheless, the “straddle” is much more than only a “money-making machine.” Many traders, as well as some Forex options brokers, sometimes forget how effective the “straddle” is as a risk-management tool.

The “secret” of the “straddle” is in the simultaneous use of the two, contrasting binary options with the same asset. The position of the two options is essential. A call option should be purchased when the value of the Forex pair is as low as possible. With the put option, it’s exactly the opposite when the exchange rate reaches its peak in the Forex market, then it’s time to invest!

If the exchange rate ends anywhere in the “straddled” range, then both the call and the put option will produce a profit, each. This is why some Forex options brokers have decided to nickname this strategy “the double-profit.” However, what happens if the market suddenly changes? What if the exchange rate reaches a new high, or drops so much that it creates a record low?

If the exchange rate leaves the “double profit” range, one of the two options will expire worthless. Nevertheless, this is exactly when you will see how effective the “straddle” is as an investment protection.

Truthfully, of the two opposite options will indeed expire out of the money. However, thanks to the ingenious solutions of the Forex binary options, the remaining one simply has to bring a profit! Add to this the limited risks that the binary options guarantee, and it’s clear how even this situation can be lucrative for the trader!

The profit rate in the majority of Forex binary options trades is between 75% and 85%, plus the entire amount of the investment back. The risk, on the other hand, is limited to the investment amount by default.

The best Forex options brokers allow their clients to choose the risk-to profit ratio. For instance, the trader can decide to keep a part of the investment safe, even if the option expires worthless. Couple all this with a guaranteed return of 175-185%, and after a few simple equations, it’s clear how beneficial the “straddle” can be. With the risk set to less than the investment amount, and the full profit from the remaining option, the losses are easily covered. Furthermore, if you “tweak” the investment amounts in each of the two options, you can even end up with a profit.

This is how valuable learning the “straddle” strategy is – not only you have a huge chance of making a double profit every time you trade, but even when you “lose,” you will be earning money!