Double No-Touch Binary Options Explained

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dbltouchbybls

Price double one-touch and double no-touch binary options using Black-Scholes option pricing model

Syntax

Description

Price = dbltouchbybls( RateSpec , StockSpec , Settle , Maturity , BarrierSpec , Barrier , Payoff ) calculates double one-touch and double no-touch binary options using Black-Scholes option pricing model.

Examples

Price a Double No-Touch Option

Compute the price of a double no-touch option using the following data:

Define the RateSpec using intenvset .

Define the StockSpec using stockspec .

Calculate the price of a double no-touch binary option.

Input Arguments

RateSpec — Interest-rate term structure
structure

Interest-rate term structure (annualized and continuously compounded), specified by the RateSpec obtained from intenvset . For information on the interest-rate specification, see intenvset .

Data Types: struct

StockSpec — Stock specification for underlying asset
structure

Stock specification for the underlying asset, specified by the StockSpec obtained from stockspec .

stockspec handles several types of underlying assets. For example, for physical commodities, the price is StockSpec.Asset , the volatility is StockSpec.Sigma , and the convenience yield is StockSpec.DividendAmounts .

Data Types: struct

Settle — Settlement or trade date
serial date number | date character vector | datetime object

Settlement or trade date for the double touch option, specified as an NINST -by- 1 matrix using serial date numbers, date character vectors, or datetime objects.

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Data Types: double | char | datetime

Maturity — Maturity date
serial date number | date character vector

Maturity date for the double touch option, specified as an NINST -by- 1 vector of serial date numbers or date character vectors.

Data Types: double | char | cell

BarrierSpec — Double barrier option type
cell array of character vectors with values of ‘DOT’ or ‘DNT’ | string array with values of “DOT” or “DNT”

Double barrier option type, specified as an NINST -by- 1 cell array of character vectors or string array with the following values:

‘DOT’ — Double one-touch. The double one-touch option defines two Barrier levels. A double one-touch option provides a Payoff if the underlying asset ever touches either the upper or lower Barrier levels.

‘DNT’ — Double no-touch. The double no-touch option defines two Barrier levels. A double no-touch option provides a Payoff if the underlying asset ever never touches either the upper or lower Barrier levels.

Data Types: char | cell | string

Barrier — Double barrier value
numeric

Double barrier value, specified as an NINST -by- 2 matrix of numeric values, where the first column is Upper Barrier(1)(UB) and the second column is Lower Barrier(2)(LB). Barrier(1) must be greater than Barrier(2).

Data Types: double

Payoff — Payoff value
numeric

Payoff value, specified as an NINST -by- 1 matrix of numeric values, where each element is a 1 -by- 2 vector in which the first column is Barrier(1)(UB) and the second column is Barrier(2)(LB). Barrier(1) must be greater than Barrier(2).

The payoff value is calculated for the point in time that the Barrier value is reached. The payoff is either cash or nothing. If you specify a double no-touch option using BarrierSpec , the payoff is at the Maturity of the option.

Data Types: double

Output Arguments

Price — Expected prices for double one-touch options
matrix

Expected prices for double one-touch options at time 0, returned as an NINST -by- 1 matrix.

More About

Double One-Touch and Double No-Touch Options

Double one-touch options and double no-touch options work the same way as one-touch options, except that there are two barriers.

A double one-touch or double no-touch option provides a payoff if the underlying spot either ever or never touches either the upper or lower Barrier levels. If neither barrier level is breached prior to expiration, the option expires worthless and the trader loses all the premium paid to the broker for setting up the trade. For example, if the current USD/EUR rate is 1.15, and the trader believes that this rate will change significantly over the next 15 days, the trader can use a double one-touch option with barriers at 1.10 and 1.20. The trader can profit if the rate moves beyond either of the two barriers.

References

[1] Haug, E. The Complete Guide to Option Pricing Formulas. McGraw-Hill Education, 2007.

[2] Wystup, U. FX Options and Structured Products. Wiley Finance, 2007.

Touch and No Touch Options

Touch and no touch options are a great way for you to further customize your trading experience. Because there are only two different outcomes that can possibly occur, these are still considered to be binary options. You can be right or you can be wrong. There is no middle ground. Even though they are slightly different from the traditional call/put option, they are still a powerful tool that you can use to your advantage in the fast paced world of binary options trading.

Touch Options: What are they?

Trading binary options involves substantial risk and may lead to loss of all invested capital

Touch and no touch options are not too complex. Basically, the broker that you are using assigns a price goal. If you choose touch, the asset must meet or surpass that assigned price sometime during the active minutes of the trade. If the price is reached or passed, the asset is said to have touched and if you chose the touch option, your trade would be profitable. If the price is not reached, the asset is said to have not touched and you will only be profitable if you chose the no touch choice. If you don’t understand the concept we suggest you take our binary options trading course online. This is naturally not something we charge you money for. We offer all our articles and services for free.

Touch Options: How to use Them?

To start off: You need a solid binary options trading education and definitely a binary options practise account if you are asking this question.

To answer: Touch/no touch binary options can play an important role in an experienced binary trader’s routine. They become especially useful during times of market volatility when prices might be uncertain. For example, if an asset’s price is wildly going up and down, you might have no clue about where the price will be a half of an hour from now, but you can say with a degree of certainty that the touch price will probably touched upon, even if it is for only a very brief moment. In instances like this, touch/no touch trades can be extremely powerful.

Touch No Touch Options: Why are they Important?

Imagine that you had complete control over your skills and only were looking for binary options highest payout. This is where customization and skills becomes so important when trading Touch Options. It’s impossible to have complete control, but the more that you can customize your trades, the closer you get. The higher the degree of customization you can exert over your trading, the closer that you will be to this above scenario and reach the No Touch Options skills needed to trade this instrument. Touch or no touch options are just one more tool that you can use to help you customize your trading more specifically to your own needs. You might find these to be useful once in a while, seldom, or never at all. But regardless of how you use them, the fact remains that they allow you to control the trade in a small way that maybe you weren’t able to before.

Who Offers this Type of Binary Trading

Pretty much all of the major brokers now offer touch/no touch binary options, although they are relative new comers into the financial world. This new development is a good thing, though. You might not want to use this type of trading for every trade, but having the choice to use them is just a further tool in your trading work box that would not have been there before. If your broker does not currently have this type of option, you may want to consider finding a broker that does. These brokers are generally bigger and more reputable than the brokers that do not offer them. We have compiled a list of the best binary options brokers with low minimum deposit

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Exotic Binaries

There are a select few brokers that have what are officially called high yield binary options. These range in return percentages from 200 percent all the way up to 500 percent. However, as you might have guessed, these are not nearly as easy to be right with as traditional style binary options. For one, you are severely limited in your choices. Touch/no touch options are used here, but you are generally restricted to the touch option. For example, consider Apple’s stock. If the underlying asset is currently at $150.00, the touch price might be at $152.50 if you decide to go with a high yield exotic option. This would be pretty tough to accomplish in just 10 or 15 minutes, which is why the rate of return will be so much higher on these. There will not be a no touch option here since this would be extremely disjointed. Instead, to make these a more accurate binary option, many brokers will offer a lower touch price, too. In this instance, that price might be at $147.50. This way, the client is still given two choices so that they can still customize their trading.

Boundary options, which are closely related, are not as widely offered. These options are only offered by a few different brokers, but can be used to further customize your trading if you see fit. You should be vary trading before you understand the concept of itm and otm meaning, which is essential basic knowledge for understanding binary options trading.

Conclusion about No Touch Options

For many traders, using touch/no touch options provides another level of customization that can help them to trader more effectively. However you look at it, the touch or no touch options are just a further tool that you can use to help advance your trading. Their importance lies in the fact that they offer you one more degree of control over an aspect of your trading that you didn’t have control of beforehand. This makes your job a tiny bit easier. When you look for brokers to trade Touch Options do not signup on any platforms named on our binary options brokers blacklist.

***Your capital may be at risk. This material is not investment advice.***

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Touch/No Touch Option

Intrducing the One Touch Option

The One Touch option is a type of binary options contract that is available on some selected platforms in the binary options market. Usually traders will only get to see this trade type on the trading platforms of brokers who are white-label partners of Tech Financial Ltd or SpotOption Ltd.

The One Touch option is a high yield option in which the broker sets payouts to as high as 250% to 500%. In return, the trader is expected to predict if the asset in question will touch a particular strike price located at some distance away from market price, in the one week that the trade will be active.

The trade expiry is one week, starting at anytime from Friday/Saturday the previous week and terminating at the close of the trading day on Friday a week later. Therefore, the trader can only enter a position from Friday evening till Sunday morning. The exact open time for the trade depends on the broker used for the trade execution. The hallmark of this trade is that the strike price is located far away from market price, and the ambitious nature of this strike price is what drives the high payouts promised for this trade.

So what chances does a trader have in succeeding with this type of trade? Success with the One Touch will require that the trader select the right kind of asset and the right opportunity at the right time.

Selecting the Right Asset

Assets which are naturally trending, and whose price movements have high volatility are the assets of choice for this trade type. Assets that are more inherently range-bound assets or assets that have a tendency to trade in a very tight range do not perform well with this trade type. Certain commodities such as gold, as well as certain stocks and currencies will tend to do better with this trade type than other.

Selecting the Right Opportunity

An asset that is on the verge of a major breakout is an asset that is presenting the right opportunity. Breakouts are created by major news events. In the stock market, a trader will typically be looking at the corporate earnings season, singling out assets for which the market has major expectations.

For the forex market, the trader will be looking for high impact news events that are likely to lead to big moves of up to 300 pips or more. Recently, we have seen gold and the Australian Dollar sell off massively in the markets. The moves seen are indicative of what a trader looking to profit big time from the One Touch trade should be watching out for. These are the times when an asset is said to present a wonderful opportunity to profit.

Trades are typically set during the weekend. The weekend will therefore be a good time to set up trades on assets that present the right opportunity on the Monday or Tuesday following the trade setup. Therefore, the trader will have to look at the time tables or calendars for events such as release of news or release of corporate earnings.Assets that are considered the right candidates and whose news will be released on a Monday or Tuesday following the weekend the trade is setup are then selected. If an asset whose news will be released on a Thursday is used, either the trade will be too late to catch its move (if setup on the Saturday following the Thursday), or the trade will not have enough time to experience the kind of move it needs to end up in the money (if setup on the Saturday preceding the Thursday in question). So timing is key. We need the news to work in our favour and to have enough time to do this quite early.

Trade Requirements for the One Touch Trade

The trader must select from the assets that the broker has presented for the One Touch trade. Usually two trades for one asset are presented, with the strike price located above market price for one trade, and located below the strike price for the other trade. The trader therefore has to pick the right direction for the trade in order to succeed. Certain clues as to what direction a trade may possibly take are to look for continuation patterns on the charts, and to study historical news reports to see whether a trend has developed which could be used as a predictor of what the price movement is likely to be.

Once the trader has these pieces of information, the trade can then be taken when it opens and then the big payday can be expected.

More About Adam

Adam is an experienced financial trader who writes about Forex trading, binary options, technical analysis and more.

Бинарные опционы No-Touch

Если вы уже имеете представление о стандартных бинарных опционах, то вам наверняка интересно будет узнать, какие еще существуют виды сделок в торговых платформах брокеров.

Довольно распространенным видом является No-Touch опцион. Суть его состоит в том, что цена выбранного для инвестирования актива не должна коснуться установленного трейдером уровня до истечения срока экспирации.

Другими словами, трейдер устанавливает верхнюю (или нижнюю) границу, которую не должен пересечь график цены за оговоренное время. Если это условие окажется выполненным, трейдер получает прибыль. Если нет, то его инвестиция оказывается неудачной и большей частью сгорает.

Как вы могли заметить, данный вид опционов имеет обратные условия опциону One Touch, по которому график цены актива, наоборот, должен коснуться обозначенного уровня хотя бы единожды.

Опционы No-Touch рекомендуется использовать для активов с невысоким уровнем волатильности, либо в случае, если присутствует ярко выраженный тренд и можно с высокой степенью вероятности прогнозировать, что цена не поднимется, либо не опустится ниже определенного уровня.

Сделки по условиям No-Touch можно заключать в периоды относительного затишья на рынках, когда наблюдается преимущественно боковое движение.

В целом, данный вид сделок, при условии грамотного анализа, способен обеспечить хороший уровень дохода.

В отличие от опциона One Touch, где трейдер еще до окончания срока экспирации может выиграть сделку, условия No-Touch не предполагают такой возможности. Зато по опциону No-Touch трейдер может понять, что проиграл сделку, до истечения его срока, если график цены коснулся ограничивающей линии. Это позволяет не тратить время на данную сделку и переключиться на анализ новых опционов.

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