Re: binary options/bets Quote:
Originally Posted by j2a_aj It is betting and the house ALWAYS wins. For example, a coupla days back, the India 50 market budget was scheduled for release. A 120 point move usually has the risk reward ratio of 1:50. However, I saw IG markets move it from 1:12 (already high) to 1:4 in a matter of 4 minutes with no change in the underlying price! | Ig know there is major news due and they will set it higher than the usual 1:50, say 1:12.
Then a rush of IG clients all betting the same way will push the price further to 1:4..
The price/volatility of a binary option seems to be set by a combination of
The option pricing model,
Manual intervention by IG (due to volatile news events etc),
Client order flow. |