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Options expiry and how to choose them

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Expiry means the end of the term. In binary trading, the time at which the transaction ends is chosen independently by the trader. But at the same time, there are nuances that need to be considered.

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Today you will learn how to choose the expiry time of options with maximum benefit for you. Understand the difference between short-term and long-term transactions.

Options expiry and how to choose them

The expiration date of the option is…

Let’s take a break from binary trading for a moment and think about the Forex market. What determines profit on Forex? Let’s recap. Profit depends on lot size, leverage and the number of previous pips.

In binary options, the main thing is the value of the investment and ensuring that the closing price is higher or lower (depending on the direction of the trade) than the price at the time the trade was opened. The expiration date of options is only the last one. This is the time to close the deal.

Option expiration date or time?

Brokers can set the duration of the transaction in two ways:

  • Specify the exact expiration date of the contract, for example 15:30 or 21:05, 21:00. This option is offered by uTrader, Binomo and others;
  • Choose the option’s expiration time, for example 5 minutes, 1 hour, etc.

Which is better: time or date? In reality, there is no significant difference, and in some transactions you can quickly move away from one option and get used to the other. But if you are forced to choose, the option’s expiration time is better, as you won’t need to additionally calculate how many minutes or hours you need to wait until the contract closes.

But the expiry date also has its merits. For example, if you choose to end the transaction in an hour’s time, you can conclude several other transactions at different times, but with the same expiration date.

Popular transaction terms

Traders trade binary options with a wide variety of expiration dates. Brokers offer trades from 30 seconds to several months. But at the same time, not all options are interesting. But there are options for which most strategies are suitable:

Expiration date Explanation
1 to 5 minutes A special method of short-term trading. And these traders are known as scalpers. Many beginners are seduced by the possibility of making a profit every two minutes. But this trading method is the riskiest, because during short-term transactions, the market is full of false trading signals. No experience? It’s best to choose a longer trade.
15 to 60 minutes If you’re a beginner and long-term trading doesn’t appeal to you, we recommend choosing this exact expiration time. The noise is much less than with turbo options and you can make several trades a day.
From 1 hour until the end of the day Of the three options, this is the least risky, as it eliminates most of the noise from the trade. But many traders don’t like waiting for the result for hours. Therefore, these trades do not enjoy accrued interest.Prazos de vários dias praticamente não são usados ​​por traders de opções binárias, embora estes método seja menos arriscado do que negociar em períodos de um minuto a uma hora.

What is the best expiration time for binary options?

As we’ve said, each of the maturity date options has its advantages and disadvantages. But what is the best way to negotiate? Is it worth making short-term deals or is it better to be persevering and make long-term contracts?

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If you don’t want to wait several hours or days to make a profit at any cost, we’ll tell you what the short-term trades are.

Qual é o tempo de expiração ideal?

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It is possible to make money with options in 60 seconds. But this requires an effective strategy and experience. In this case, it’s difficult to apply technical analysis, as the indicators will react to all the false noise, which also won’t allow you to build support and resistance levels.

It’s also complicated to use news in short-term trades, because after the news is released, asset prices can be chaotic for a few minutes. In addition, some brokers don’t allow 60-second trades during the news release period.

If you’re not confident in your abilities, choose an expiry time of at least 30 minutes, or better still, over an hour.

But the above rule is individual and depends on various factors. So we’ll also tell you how to choose the ideal expiry time.

How to choose the best expiration dates for binary options

Each option has its own ideal expiry time. However, there are several factors to consider when choosing them. For example, did you know that you need to take into account the type of asset?

If you want to participate in short-term transactions, choose indices or commodities as assets. These usually move without too many price fluctuations and are more stable. It is therefore much easier to successfully predict further price movements.

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Currency pairs are best for medium and long-term transactions, lasting from an hour to a month. This is due to the fact that the currency is often exposed to unpredictable fundamental data that affects the movement of quotes, albeit slightly.

But when trading stock market instruments (shares, etc.), it’s best to set the expiry date of the options to something more than a week.

In addition, you need to choose the deadline for concluding the transaction, based on the strategy you have chosen. In the “Education” section, we often publish articles describing various strategies. Some are suitable for scalpers, others for long-term investments.

Each method has its own analysis. So if you’ve managed to choose a good strategy for hourly speculation, it may become useless after 5 minutes.

Let’s give you some advice on choosing a strategy. Short-term contracts should not be concluded on the basis of fundamental data. Technical analysis is more effective in this case. Although it doesn’t guarantee a profit. You will have to test each strategy carefully on a demo account to avoid losses.

A universal way to select an expiration date in the options

This is not a mandatory rule, but useful and effective advice. We call it “2 timeframes down”.

So, if you want your trade to be closed in an hour, we recommend setting the chart analysis 2 timeframes lower, i.e. M15 (the first TF below is M30, the second is M15). Trading for 30 minutes? Set the timeframe to M5. In some cases, this rule can be changed. Thus, the ideal expiry time is a trade during which 3-5 Japanese candles are closed.

The expiration date of options is an important aspect of the trade on which a trader’s success depends. So don’t forget the tips we’ve given you today.

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Until 2016, I worked as a cook in a small restaurant. I know very well how challenging it is to stand all day and receive a salary that barely covers the needs of a family. I ventured into trading with the goal of earning extra income by trading during my free time. Like most people, I had a difficult start, but fortunately, with a lot of dedication, I reached a point where I could resign from my main job and fully dedicate myself to binary options (with much improved quality of life).

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