Whenever trading binary options, the main concern a trader has is to look for the best possible setup for the option to expire in the money. If the option is in the money at the expiration date, then this means the option is profitable and the trade was successful.
The following are the conditions for a binary option to be considered profitable:
- buying calls implies a trader is looking for price to increase, and therefore, in order for the option to be considered profitable, the price at the expiration date should be bigger than the striking price (the price the option is actually bought). If these conditions are met, then the option is said to expire in the money, and it is considered profitable;
- buying puts implies a trader is looking for price to decrease, and therefore in order for the option to be considered profitable, the price at the expiration date should be lower than the striking price (the price the option is actually bought). If these conditions are met, then the option is said to expire in the money, and it is considered profitable.
Based on the above, the expiration date is important when trading binary options and, based on the time frame analyzed, the expiration date should vary, and hence the binary options should differ.
The daily chart is at the limit of being considered long term time frame and starting from this time frame even binary options with short expiry dates can be traded as the Ichimoku elements starting with this time frame offer good support/resistance areas. The binary options recommended to be traded on the daily chart are:
- options with medium/short term expiration date, like end of day would be the preferred expiration date here because when price is trending in a bearish market and is reaching the Kinjun on the daily time frame then there is most likely the closing to be below Kinjun. Depending of the moment of time during the day such a thing happens, the expiration dates can differ from short to medium term expiration dates.
- options with medium term expiration date: my recommendation would be here to look for either end of week (if the analysis is made at the beginning of the week) or one week expiration dates;
- one touch options: ideally to be traded when specific patterns appear on this time frame, like contracting triangles, pennants, etc. This kinds of patterns allow time to be taking into consideration and therefore the expiration date can be set easily;
- using the option builder tool to customize your binary option.