Option Builder Tool Versus AnyOption
Many binary options brokers are offering a new tool called the Option Builder. This tool is found primarily on broker sites powered by SpotOption. SpotOption is a white label trading platform that is used by more than 80% of the binary options community. Even though it is white label most brokers using the platform resemble each other in many ways. Features, layouts and tools are nearly identical across the field. SpotOption is a CySEC regulated market maker but not an actual broker or bank, it functions as a kind of exchange for binary options brokers who choose to use the platform. Although new to SpotOption brokers the idea has been around for quite some time. AnyOption, which provides its own platform, has always allowed traders to choose from a list of risk/reward profiles. AnyOption also offers better profiles. The top end offered by SpotOption brokers is usually around 74%/0%, the top end offered by AnyOption is 80%/5%. Well known brokers using the SpotOption platform include Banc De Binary and TraderXP.
Option Builder Offers Customized Binary Options
At first glance I was not impressed by the Option Builder tool. I did not think the tool gave the amount of flexibility it claims. I felt that it was just fluff meant to attract new traders. After examining it more closely and running some math equations I have come to the conclusion that the tool does indeed have something to offer. The tool is advertised as providing flexibility to traders, which it gives. It is also supposed to allow you to customize your trades to fit your style through custom expiry’s. This is true to some extent but expiry’s are limited to 24 hours from purchase. On AnyOption you can not custom fit your expiry’s but you can trade daily, weekly or monthly. Before I get into the nuances of trading with this too I will first go over what the Option Builder is.
The Option Builder is not as complicated as it may sound. There is actually very little difference between the tool and a standard binary trade. A standard trade has four steps, an Option Builder trade has five. A standard trade has expiry’s that may be 60 second, end of the hour, end of the day or end of the week (or others depending on the broker). An Option Builder expiry can be custom set to the hour and minute, up to 24 hours from purchase. Standard binary trades have one risk/reward profile, an Option Builder trade has several. The four steps of a standard binary option trade are 1) Pick an asset 2) Pick an expiry 3) Enter an amount to trade 4) Place the order. An Option Builder trade has the same steps but also includes one extra which is to pick a risk/reward profile.
I used Banc De Binary’s website to get some information on possible risk/reward profiles. This broker, and others using SpotOption, has four available profiles. The actual amounts may vary from broker to broker so be sure to check. BDB offered 74%/0%, 70%/10%, 62%/20% and 55%/30%. What this means is that trades with a 74%/0% profile will return 74% on a profitable trade and 0% on a loser, the 55%/30% returns 30% on losers and 55% on winners. At first I thought, why would you need to use this tool? It seemed as though if I wanted to risk less per trade I could just trade less, make sense? After running some numbers I found out that there is actually some advantage to using the OptionBuilder, depending on what you could expect to return from a standard binary option
Does The Option Builder Tool Reduce Risk?
Here is an example. I am bullish on a trade but don’t feel comfortable risking my usual $100. Instead of reducing my trade amount I decide to use the option builder and chose the 55% reward 30% refund profile. This means that I would be risking $70 ($100 cost of trading – $30 refund) for a potential return of $55. Assuming that the corresponding binary option trade returns 75% with a 0% refund I would have to trade and risk $73.33 to get the same payout. This makes the Option Builder trade better, it takes less risk to return the same profit. I got similar results with the 62% profile. In this scenario $100 risks $80 for a return of $62. In order to gain $62 with a 75% return I would have to risk $82.66. Once again this is a little more expensive than the Option Builder but the margin between the two has gotten a little smaller. In fact, I discovered this margin diminishes as you move up the ladder until you get to the 74% reward level. At this level to get a $74 return you only have to risk $98.66, less than the $100 it would take to get $74 with the Option Builder. So, based on these figures it looks like the Option Builder could save you some money. However, if you are really bullish on a trade it is cheaper to use the standard option.
The 75% return I assumed in the first examples is the high end of the profit range found on Banc De Binary. The low end is around 70%. Using that figure in the comparison the decision to use the Option Builder becomes a no brainer. To return $55 with a 70% payout you have to trade and risk $78.57, much more than the 70% risk using the Option Builder. This increase in risk continues all the way up to the top tier of 74%/0%. In order to return $74 with a standard trade you have to trade and risk $105.71.
Anyoption Has Offered Traders The Choice For Many Years
Now lets compare Option Builder to AnyOption. Using the bottom tier risk/reward profile and trading $100 with the Option Builder you risk $70 to get $55. Using Anyoption’s bottom tier you only have to trade $91.66 to return the same $55 and at the same time you are only risking $68.75. This is quite a bit of difference from the Option Builder tool and a new reason for me to like my favorite binary options broker even more.
AnyOption has always offered different risk reward profiles
My final thoughts on the Option Builder…I think it is a good tool but it takes some due diligence in order to use correctly. The ability to choose a risk/reward profile can save you money and enhance your returns, depending on what you might expect to get from your broker trading their standard binary option. The ability to pick expiry is another good feature, but again, you have to use it correctly. I rarely trade real money with a time frame less than one day, preferring to take signals on daily charts and using end of the week or end of the month expiry. However, I do see some real advantage for day traders and day to day traders. Expiry can be set to coincide with economic or earnings events or for trading overnight, which is not available with most binary options. The biggest disadvantage to the Option Builder is that you can’t always make a trade when you want to. If no one else is trading the time frame you want you will not be able to trade.
Click here for my full review of AnyOption
Click here for my full review of Banc De Binary