May

14

EZ-Trader is a website that sells continuous one-hour binary options on forex, stocks and commodities. A cursory examination suggests that the payout is around 65% for winning trades (compared with casino payouts north of 90%) — or put another way, traders need a 61% winning ratio to just break even.

But watching their website leads to possibly more interesting results: It appears that they tweak their payout ratio from time-to-time — but the payout changes do not appear to be consistent with any obvious intraday volatility model (or with economic/fundamental data releases). They keep the payouts symmetric for puts and calls on the same instrument. And they seem to adjust the payouts for all stocks at the same time, regardless of volatility correlations.

Some quant-minded Daily Spec readers might want to study this further… for fun or profit.


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