Interactive Option is a brand name of Pegase Capital Limited, a CySEC regulated investment firm that is authorized by the Financial Conduct Authority (FCA) under the reference number 625551 allowing the delivery of financial services to UK residents. As a consequence, Interactive Option complies with strict standards for compliance, security of client funds and transparency of conditions. As such it falls under the scope of the reliable binary option brokers in Europe. The binary options broker offers no less than 7 different binary options types that allow clients to implement diversified trading strategies and adapt to their market scenario. The binary options types available at Interactive Option are the following: High / Low options (traditional binary options), Pairs options (trade the spread between two different assets), Long term options (long maturities), Turbo (60 seconds binary options), One touch, Ladder and Forex (traditional forward rate agreement).
Since Interactive Option is one of the only binary options brokers to propose ladder options, we decided to propose you an overview of these options and provide you with some insight into how and when you should use them.
What are ladder options?
Ladder options were once restricted to professional investors because they are more complex than traditional binary options but also because retail brokers didn’t have the necessary risk and hedging processes to manage such options. Interactive Option developed an interesting platform to trade ladder options in a lot simpler way than what was proposed by institutional brokers in the past. Interactive Option will price 5 different option strikes: 2 above the current price (Out-of The-Money for a call), two below the current price (In-The-Money for a call) and 1 at the current market rate (At-The-Money for a call)
While Traditional binary options (High / Low) are limited to choosing up or down based on the current market price that becomes the strike, Ladder options give you 5 different opportunities. When you think about it, the AT-The-Money ladder option (where the strike corresponds to the current market price) is just a traditional High / Low options.
Ladder binary options explained
As you can guess, the further out of the money the option is, the higher the return. It means that for a call, if you chose the option with a strike higher than the current price, the proposed return on this call will be higher than the proposed return on the call with a strike that is equal to the current price. This is because the underlying asset needs to increase much more in the first case in order to make a profit. The broker thus rewards you with a higher return to compensate for the higher risk you take.
What are the different steps to trade a ladder binary option?
We split the different steps on the above figure to help you understand it all. To implement a ladder option strategy, you should first select the underlying asset (1) and the expiry of your option (2). You then need to enter the amount you wish to invest (3). The current EUR/USD is 1,35673 (4) in the above figure and you can see that Interactive Option gives you the opportunity to trade options with five different strikes. On the right, you can see the proposed returns for the ladder options (5). As we explained it above, the High binary option with strike 1.35867 (above the current rate) has a proposed return of 587.68% while the High binary option with strike 1.35487 (below the current rate) only has a proposed return of 5.06%.
The advantages of ladder binary options
Ladder binary option returns or payouts can reach 1’500%. This is the single most important advantage of this binary options type. It also means that experienced traders are able to cash in a lot more when they predict a strong market move. Ladder options give you the opportunity to implement more advanced strategies based on your market scenario. When you believe the asset price will go up but don’t know the magnitude of this move, you can simply use a traditional High / Low option with a 90% proposed return but when you believe the move will have a strong magnitude, you should definitely go for an Out-of-The-Money ladder option.
In short, ladder binary options allow you to benefit from higher returns in exchange for higher risks. We only recommend this option type to experienced traders but still believe it represents a powerful tool for the implementation of advanced trading strategies. Option proposes ladder binary options on AUDJPY, AUDUSD, EURJPY, EURUSD and USDJPY with maturities 15 minutes, 30 minutes, 60 minutes and end-of-day.