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Turning a Put Option into a Call

Sometimes in trading you have to make as fast decision and in this case we were looking for a put option around resistance area, but determined that a call option on the pullback was a better choice. These types of trades are ones that come along every so often and will allow you to trade actual price action versus taking a guess of whether the price will reverse. In this case we are waiting for price to move to resistance one only it failed to get there. This allowed us to look at the retracement down to a certain support level and this is where we took our call option at TradeRush.

It doesn’t happen often, especially when you’re looking at this particular set up that you change your mind on the fly. When you’re trading the EURUSD and you notice price moving up pretty strong you want to stick with the trend. When price gets extended past a certain resistance area is where you are better off sticking with the trend. Yes there are some trades available throughout the day where you could take reversal trades, however it is better to have a nice set up with a few catalysts in your favor.

Our entry was a call option trade which ended up being a nine PIP winner. This is the power trading with the trend and allowing price to work the way it’s been working in the most recent past. Anytime you see price move through two resistance levels you can then seek a reversal trade. We were looking for this to happen to us, but it never reached the area where we wanted to take a put option. In the end it was better that we stuck with the trending price and let it move in the direction we were looking at.

In the image below you can see how price tried to reach resistance one but never did work before we entered our long option trade. You can see how price eventually moved through resistance one and this would’ve been a good area to take the put option. Notice how price retraced back down before making any new moves the north side. Soon after this trade was complete, price then moved through to new highs and up to different resistance areas.

Trading a Put Option Near Resistance

You never know what you’re going to see when trading the binary options market, but it helps to understand both sides of the market whether you’re looking for call or put options. Always keep an open mind, but try to stick with the trend if possible.
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