What Are Ladder Options

Do You Want To Gain An Edge In Your Account?

Well, do you? If so then I think you will want to know everything you can about ladder style binary options. If I haven’t already gotten your attention let me tell you that a ladder binary option can pay as much as 1400% of investment on an in the money close. This is not a new thing but simply an overlooked, underutilized an unappreciated trading tool available from some brokers. They are not limited to SpotOption based brokers but for this article I will be using RedWood Options for my example. These option embrace the best of both CFTC style 0-100 binary options along with EU/CySEC style spot binary. They use a system of strikes, the ladder, at which you can choose to be high or low. The greatest thing about them is the leverage, or maybe the versatility, or the profits.

What Is A Ladder Binary Option?

A ladder binary options is a super charged form of the standard digital binary trade. The difference is that a standard binary strike price is based on the spot price of the underlying asset where as with ladder binary the strikes are preset. Instead of choosing whether the asset will finish higher or lower than the price it is trading for now you choose whether it will close higher or lower than the chosen strike. A standard binary pays in the range of 70%-95% depending on broker whereas a ladder may pay in a much wider range with greater potential for profits. To put it into perspective a ladder binary option can pay as little as 7%, a fairly safe trade, or as much as 1400%. I bet that got your attention.

I bet by now you are wondering how this can be. It is because ladder binary also incorporates a feature of one touch options ie out of the money trading. With one touch there is only one strike price that the asset has to touch and it is usually way way out of the money making it a very risky trade. Ladder options also have out of the money strikes that pay over 1000%, but there are also less risky strikes as well. The less risky strikes can be in the money or out. An out of the money strike may pay 200% or more while an in the money strike may only pay 20%. Look at the example above. This is the ladder option for the EUR/USD with five strike prices listed. On strike is at the money, two are above and two are below the money. You can choose that the asset will be higher or lower than any of these strikes prices with a payout associated with each one. The payout is constantly changing based on the price of the underlying asset.

Two Ways To Trade With The Ladder

There are two ways to trade with the ladder, well, maybe three. There is the risky way and the safe way, with a third less risky method somewhere in the middle. For risky traders, or those who are certain of a large movement in the underlying asset, you can choose strike prices that are out of the money. This will boost your returns immensely. As an added bonus, you can stick to regular binaries until you get a strong signal and then switch over to ladders in order to catch the movement. Less risky traders may choose to stick to at the money or even in the money options. You can see by looking at my example above that it is possible to purchase an option that is already in the money and capture profits that are nearly guaranteed. Of course, your profits will be smaller than if you choose the risky route but it only takes a few trades per day to add up to a lifetime of success.

My final thoughts on the ladder options? I like them and I am glad that I rediscovered them. They are a great method for trading and provide a lot more flexibility than standard digital binaries. The profit potential is enormous but you have to be careful and trade appropriately. The more risky strikes that pay 1000% or more pay that for a reason and that reason is you are more likely to lose than to win. That being said using them to capture moves on a strong signal and/or market moving event can be highly profitable. At the same time they also offer a way to generate profits while the market is not moving so I think that balances it out. Regardless, I will be keeping the ladder in my bag of tricks.