There are a multitude of ways to profit trading FX options. The first type that was established when the industry began in 2008, which remains the most popular way to trade to this day, is High or Low FX options.
While this type of FX trade doesn’t give out the highest payout return percentages, High/Low FX options is definitely the safest way to consistently make a return on investment trading FX options.
What Are High/Low FX Option Trades?
High/Low FX trades simply involves a trader purchasing a Call or Put option of a specific asset. A Call is the equivalent to placing a buy order, which means a trader believes the asset will rise in price upon the point of expiry. A Put option means to sell, and it means a trader believes the value of an asset will fall in price under the allotted expiry time.
Apart from Call and Put, there are several more basic elements to trading High/Low options worth noting, which include: The strike price, an expiration time, the asset being traded, and the amount of money being wagered in the trade.
Trading High/Low Options
The strike price is each FX trade’s point of entry in price. Depending on the broker being used, every trading platform will give slightly different price quotes for a specific asset. In order for a trade to be considered in the money and for a trader to profit, the strike price must be higher or lower than price at the time of the trade’s expiration, depending on whether a Call or Put was selected.
For example, if a trader believes, based on their analysis, that the currency pair USD/JPY will rise in value in the next 5 to 10 minutes, then the trader would select a 5 minute expiry or a 10 minute expiry time, based on what’s available to them. The expiry times offered by each broker may vary slightly.
Because the trader believes USD/JPY’s price will rise, the trader selects a Call option after he or she has selected the amount of money they want to wager on the trade. 5 minutes goes by, now the trader is excited to see they won the trade by 2 pips. In other words, the point of expiry was 2 pips higher than the selected strike price.
Because the contract offered an 80% return payout, the trader made $80 on their initial $100 investment. $80 profit in just 5 minutes – not bad!
- High/Low FX Options on Omega Options Broker Website:
- High/Low FX Options on WMoption Broker Website:
- High/Low FX Options on Roiteks Broker Website:
- High/Low FX Options on BeeOptions Broker Website: