Binary Options: How To Capitalize On Stocks Moving In China With Low Collateral

Thursday was a relatively calm day for Chinese stocks. Many of them closed the day roughly flat after initially surging in the early morning.

Hong Hao, chief China strategist at BoCom International Holdings Co. explained that uncertainty reigns among investors, which is what ultimately determines the elevated volatility.

However, the FTSE China A50 Index closed slightly up, with some of the stocks mentioned above driving the surge.

So, is there a way to bet on the performance of this index over the short term without being exposed to the high risk and collateral implied in investing in the Chinese stock market right now?

There’s always Binary Options.

Related Link: China's Weakness Isn't All Bad

What Are Binary Options?

Investing via binary options is just that: betting on a binary event. “Binary options are limited risk contracts based on a simple yes/no market proposition like will the markets go up by the end of the trading week,” binary options trading site Nadex explained.

“Binary options offer traders ways to trade the most active stock indices, commodities, forex, event and bitcoin markets with relatively low collateral.”

Using The FTSE China A50 And Binaries

There is a way to capitalize from the moves of the FTSE China A50 Index without actually investing in the index itself. By investing in binary options, investors can bet on something as simple as: “Will the index trade above 9,600 points this week?”

For those thinking the answer is yes, buying the binary options is the way to go. For those thinking the response is no, selling would be a better idea.

Below is a list of the top five constituents of the China A50 Index. This way, investors know what they are betting on – or against, and can make a more informed decision regarding what they think will happen in the next few days.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.