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By: Adam Stone
May 26th 2014 5:35am GMT, London UK
This past Friday, as we watched and waited and held our proverbial breaths as the S&P made a slow crawl upwards and eventually broke above 1900 for the first time in months. This move, which we have been keeping in a very close eye on for over a week finally happened. Binary options traders should have done very well with this one albeit, not much time was provided to get the deal done. It’s very rare that a break of this magnitude happens so late in the session but that’s exactly what happened. It was very surprising and it was very clear to see that most binary traders were already focused on their weekends instead of on the markets.

According to Eduardo Castillo, dealing room manager at GOptions “the market was ripe for a blast upwards and that’s exactly what we got. What was amazing to see though is that nearly no one got involved and this is most likely due to the break
of the S&P happening so few minutes before the close of the US session which is incredibly rare. Volume as a result of this was down to about 40% of what we normally see on such breaks and it’s a massive shame as this should have provided binary options traders an easy win for the end of the day.

More importantly, binary options traders may want to revisit the S&P again today with hopes for a continuation of the trend. There are at least 3 scenarios to take advantage of depending on the move in the markets:

1. If the S&P heads lower there are 2 sub plots:
A. Reversal strategies
B. Break Strategies
2. Continued uptrend

IF the market does head lower to at least test the lower boundary at 1900, then binary options traders can again take advantage of possible weakness. Reversal strategies will be possible as soon as the tests comes about. It looks as though this is the most likely possibility at least to start the US session. A test of the level will allow binary options traders to take up options with what looks to be a medium level of risk seeing as how the only real risk factor here is a break.

A break below 1900 could be a return to previous standards for the S&P whereby the index “jumps” over resistances and supports without returning on the same day. This could be great news for binary options traders seeing as how this will mean a low risk down option trade. Furthermore, it should allow traders to take down options with more weight on a day like today.

If the downside isn’t tested at all, this is not a problem. Simply take end of day options early in the session and keep the trades to the smaller side.

Of course, the market could surprise with a gap opening to either direction thus eliminating this entire analysis. However, the likelihood of such a scenario is seen to be at less than a 5% possibility for the day and as such, stick to the above possibilities and attack accordingly.

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Adam Stone
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Adam Stone

As COO of GOptions, my first and foremost goal is to provide traders with the most up to date info from the markets. I have been trading the markets since 2004 and have been involved with stocks, binary options, and forex trading since then. I have had no formal market education and pride myself on a self taught approach to everything related to trading. I try to focus though on both the technical and fundamental aspects related to each trading day and bring forward the most important aspects of risk/reward in the market.
Adam Stone
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