Double No Touch Binary Options definition and examples. Double no touch binary options consist of two strikes/barriers, one below the current underlying price and the other above the current underlying price. If at any time prior to and including expiry the underlying trades at or through either strike/barrier then the strategy immediately ‘loses’ and is settled at zero. If at expiry neither of the strikes/barriers has been traded at or through then the strategy settles at 100 .
In terms of taking a view on volatility, double no touch binary options are probably the most efficient of all instruments including conventional straddles and strangles. If the trader wants to sell volatility, which in the conventional sense would require selling at-the-money straddles or strangles, the trader would need to buy, not sell, double no touch binary options. This is very much a sudden death approach to trading, but at the same time, a very lucrative approach to shorting volatility assuming strikes are not touched.
The above graph shows the routes to expiry for 210/240 coffee double no-touch binary options . With 100 days to expiry, the profile is almost flat and never exceeds a price of 6.14. In other words, with 100 days to go to expiry and a volatility of 20% the odds of the underlying remaining within the 210 to 240 corridor without ever touching either strike is just 6.14%. As time passes the profiles start to rise and fill in the rectangle bounded by the double no touch binary options prices of 0 and 100 and the strike prices.
Understanding the profile of double no-touch 60 sec binary options demo options is of immense importance to those buyers of time decay because the most profitable no-touch trades on a daily basis would be positions that are of varying degrees in-the-money. For example, with 100 days to go, it doesn’t really matter where the underlying is in relation to the strikes as the buyer will not make a profit over one day. With 25 days and 8 days to go, you’d want to be buying double no-touch binary options if the price of coffee is at or very near 225.
With 8 days to go , you’d want to buy this double no-touch if the underlying was off center where the greatest time decay exists. An analysis of time decay and the most profitable underlying price levels at which to purchase double no touch binary options is in the section Double No Touch Theta. Quotex – Trade with high profits. Quotex – Trade with high profits. Accepts international clients Min. deposit $10 $10,000 demo Professional platform High profit up to 95% Fast withdrawals.
The price profiles of double no-touch binary options are greatly impacted by implied volatility, i.e. double no-touch vega is high. It follows that the greater the volatility of the underlying the greater the chance of one of the strikes being hit, hence the lower the price of the double no-touch. Figure 2 offers price profiles of double no touch binary options over a range of implied volatilities. In the 20-day example at 50% volatility, the double no-touch is almost worthless implying there’s no chance of the underlying avoiding hitting one of the strikes.
As volatility falls to 10% the double no-touch gains value.