Читать книгу Binary Options - Hamish Raw - Страница 28

The probability of an event happening plus the probability of that same event not happening is 100%. Therefore, the probability that the share price at expiry ends up above $101, on $101, or below $101 must aggregate to 100%.

On comparing Fig 1.3.1 with Fig 1.6.2 and then Fig 1.3.2 with Fig 1.6.1 enables us to draw some interesting conclusions:

1. Selling an upbet for 40 is identical to buying a same strike, same expiry downbet for 60.

2. Buying an upbet for 40 is identical to selling a same strike, same expiry downbet for 60.

As a rule:

1. For the same strike and same expiry, BUYING an upbet for price X is the same as SELLING a downbet for 100 – X.

2. For the same strike and same expiry, SELLING an upbet for price Y is the same as BUYING a downbet for 100 – Y.

3. For the same strike and the same expiry the value of the upbet plus the value of the downbet must sum to 100. This rule may appear obvious and trivial but it absolutely differentiates binaries from conventional options as the section on vega demonstrates.

This chapter has covered the two most basic of binary instruments, the upbet and the downbet. The upbet and the downbet are the basic foundation blocks to which all financial instruments can be reduced.