Binary options trading: What is a “pair” option?
What is a “pair” option? Also known as “all or nothing”, a pair option allows you to speculate on the relative performance between two companies. The trade will end “in the money” if you had chosen the asset that best performed. The amount you earn depends upon the kind of option chosen, the companies in the pair and the market conditions.
For example, if you consider Google vs. Yahoo, the pair option requires you to predict which company will best perform.
How to trade pair options: Pair options are an easy way for traders to speculate on stocks. You must choose an “above” or “below” option for the pair upon which you wish to speculate in order to determine if price movement will be more prevalent with one stock vs. the other.
What is the difference with a binary option? There is a notable difference between a pair option and a binary option. A binary option is based upon the short-term movement of an asset and the gain is a return on investment; whereas with a pair option, the gain is determined if the pair is above or below the actual value.
Advantage of pair options: Pair options are especially interesting to trade because the gain depends upon the price evolution between the two stocks. Only a slight movement could make the pair option profitable, while in binary options, significant change is sometimes required in order to make a profit. Many brokers offer pair options, so take a look at our binary options broker rankings to start trading this revolutionary trading tool now!
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