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Chapter 8: Strategies for Analyzing Event Risks

CHAPTER 8

Strategies for Analyzing Event Risks

This chapter provides strategies and methods for evaluating event risks. They require different kinds of evaluation than regular underlying markets. This is one of the reasons they are quite challenging.

One of the most exciting aspects of binary option trading is trading event risks. While the underlying markets react to events all the time, what we mean by event risks is specific economic data releases itself. The Nadex exchange offers several event risks, but jobless claims and the non-farm payroll reports are the event risks that have the most volume and therefore liquidity.

Before one considers trading event risks, it’s important to note the significant difference of the event risk binary option underlying market from all the other underlying markets. The difference is that there are no underlying market instruments! The jobless claims underlying market is simply the economic data record that is reported on the number of first time claims for U.S. unemployment benefits. These are applications for jobless benefits. The non-farm payroll jobless claims market similarly has as its underlying market, the reported monthly non-farm payroll numbers.


  

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