How those binary bets look like ? Isn't it something like - you risk 100% of bet to win i.e. 85% ? So means you ned ~59% win rate to be break even only ?
Even you think you have some "strategy", "system" etc. etc., what most ppl do is basically random with long term expected value of 0 (minus costs), and that would be for 50/50% odds. So in this situation it's even more skewed. Some cool results short term will be just effect of luck in distribution of the bets results...
I was usually getting a 1:4 risk reward. I would bet .002 btc and the payout was .007 for just a Rise/Fall. Even if you got a 60% payout its probably still better than regular options if you did the math. The numbers you are giving are probably closer to what real options odds are like once you account for the spread, fees, commission and worst of all time decay. I can put stops and exit positions with these vanilla options...the only difference is I can close it .01 ITM and get my full payout where as you would get jack shit. Also, the closer you get to the expiry, and the more ITM you are, the more you are getting as a percentage, so on a long call, time decay actually works in your favor. How can you guys who are all about risk reward, win rate and all that bullshit not see this? If you aren't directionally inclined then stocks in general are not a good idea.
Example:
If you bought an OCT16 IWM 174 call, and on October 12, IWM was trading at 175, the option would be worth -$6...on October 13, at the same IWM price, the option is worth -$153, and on October 14, it is worth -$312! You guys are getting hosed man. With Binary options the price would be increasing not decreasing.
Lets figure out the payout percentage for binary versus regular options. You are $1 ITM at expiry so you have been correct in your prediction.
Binary option payout = 100% (80% to 400% was the range actually but lets use $100%)
Regular options:
You have risked $1.95 x 100 = $1964.50 with fees. Your reward for being correct is -$1011.47 (if you closed in the morning) so your payout percentage is actually an embarrassing -51% to -100% at expiry. You want to talk about skewed numbers there they are.
These are the numbers from the exact same trade, with the same prediction. I told you guys binary options are the purest form of trading. Sure you could say just sell options then, but there has to be a counter party so I don't know how that is sustainable with a better alternative. In vanilla options, the counterparty is just playing the opposite side with the similar payouts. Also, writing options comes with its own risks...the only safe way to do it is cash settled.
So clearly, regular options are only for hedging a position, if you are buying singles or verticals for profits then vanilla options are the way to go. You could give honorable mention to 0-3 DTEs but you are still dependent on IV, and are faced with rapid time decay.
