Binary Options Arbitrage

Binary options arbitrage is a trading strategy that aims to capitalise on price discrepancies within different markets. It is considered a relatively low-risk technique due to its simplicity and how both positions are covered. This guide will explain what binary options arbitrage is, the pros and cons, plus how to get started. We’ve also listed the best brokers below.

Top Binary Options Arbitrage Brokers

  1. Pocket Option - Pocket Option offers ultra-short-term binaries from 5 seconds on one of the simplest web platforms for beginners. Payouts rival alternatives at 90%+ while the ‘Double Up’ and ‘Rollover’ features provide further opportunities to profit. Considering the negatives, the suite of 130+ assets trails binary brokers like Quotex, which offer 400+.
  2. Quotex - Quotex continues its streak near the top of the industry with ultra-short-term binaries on hundreds of assets. The binary broker provides a web platform that delivers a terrific user experience with a clean design, multiple charting styles, dozens of indicators and daily signals.
  3. Deriv.com - Deriv.com offers premium binary options on traditional and emerging financial markets with payouts up to 50,000 USD. Binaries are available 24/7, 365 days a year on a secure platform with responsive customer support.
  4. IQ Option - IQ Option is a top-rated binary options and digital trading broker. Trade on a user-friendly platform with a low starting deposit. Simply decide whether the price of an asset will go up or down to win a predetermined payout up to 90%+.
  5. Grand Capital - Trade high-low binary options contracts on currencies, metals and cryptos with high payouts. Binaries offer a straightforward bet on the short-term direction of an asset.

#1 - Pocket Option

Why We Chose Pocket Option

Pocket Option offers ultra-short-term binaries from 5 seconds on one of the simplest web platforms for beginners. Payouts rival alternatives at 90%+ while the ‘Double Up’ and ‘Rollover’ features provide further opportunities to profit. Considering the negatives, the suite of 130+ assets trails binary brokers like Quotex, which offer 400+.

"Pocket Option excels for its easy-to-use web platform which provides a best-in-class user experience for short-term binary traders. The $50 minimum deposit is also accessible for beginners while opening an account is really easy. Looking at the negatives, Pocket Option still trails alternatives in its market offering and regulatory credentials."

- DayTrading Review Team
  • Minimum Deposit: $50
  • Payout %: 92%
  • Expiry Times: 5 seconds - 4 hours
  • Bonus: 50% Deposit Bonus
  • Copy Trading: Yes
  • Platforms: Web, MT4, MT5
  • Instruments: Stocks, Forex, Crypto

About Pocket Option

Established in 2017, Pocket Option is a binary options broker offering high/low contracts on forex, stocks, indices, commodities and cryptocurrencies. With over 100,000 active users and a global reach, the platform continues to prove popular with budding traders.

Pros

  • The web platform shines for its straightforward design and usability that will appeal to beginners looking to speculate on popular financial markets in a few clicks
  • Well-funded traders who deposit $1000+ can qualify for a 2%+ payout boost, more tradable assets and exclusive perks
  • The range of payment methods beats the majority of rivals, providing fast, secure and convenient deposits for traders in most countries

Cons

  • The maximum binary contract length of 4 hours is restrictive for longer-term trading strategies. Alternatives like Videforex offer binaries up to 1 month
  • The MISA is a weak regulator with limited investor protection for retail traders
  • Pocket Option offers a slimmed down iteration of the MT4 and MT5 that doesn't provide the full charting package for advanced traders

#2 - Quotex

Why We Chose Quotex

Quotex continues its streak near the top of the industry with ultra-short-term binaries on hundreds of assets. The binary broker provides a web platform that delivers a terrific user experience with a clean design, multiple charting styles, dozens of indicators and daily signals.

"Quotex is best for making short-term trades on popular markets. The payouts up to 98% are above average and enhancements to the platform have ensured it's easy to use for beginners. That said, the lack of regulatory oversight, limited education and weak support are key drawbacks."

- DayTrading Review Team
  • Minimum Deposit: $10
  • Payout %: 98%
  • Expiry Times: 5 seconds - 4 hours
  • Bonus: 30% Deposit Bonus
  • Copy Trading: No
  • Platforms: Web Platform, Mobile App
  • Instruments: Stocks, Forex, Crypto

About Quotex

Quotex has been a top binary options broker since 2019, offering over 400 binaries across currencies, commodities, stocks, and crypto. With contracts spanning 5 seconds to 4 hours, short-term traders enjoy flexibility while payouts that exceed 95%, offer high potential returns. Continuously adapting to trader demands, Quotex provides a user-friendly platform for trading binaries.

Pros

  • Account funding is straightforward thanks to the wide range of payment methods, zero fees and intuitive cashier portal
  • Daily signals are useful for finding opportunities, especially for newer traders
  • The platform continues to delivers a superb trading environment with strong charting tools for technical traders

Cons

  • Quotex trails industry leaders when it comes to education and market research
  • Customer support has been weak during tests with no live chat and slow response times
  • There is no copy trading, which could support new traders looking to learn from experienced investors

#3 - Deriv.com

Why We Chose Deriv.com

Deriv.com offers premium binary options on traditional and emerging financial markets with payouts up to 50,000 USD. Binaries are available 24/7, 365 days a year on a secure platform with responsive customer support.

"Deriv.com will suit day traders looking to make fast-paced trades using CFDs and multipliers with high leverage up to 1:1000. The broker is also the industry leader in synthetic indices, which simulate real market movements and are available around the clock. "

- DayTrading Review Team
  • Minimum Deposit: $5
  • Payout %: 100%
  • Expiry Times: 15 seconds to 365 days
  • Copy Trading: Yes
  • Platforms: Deriv Trader, MT5
  • Instruments: Stocks, Forex, Crypto

About Deriv.com

Deriv.com is a low cost, multi-asset broker with over 2.5 million global clients. With just a $5 minimum deposit, the firm offers CFDs, multipliers and more recently accumulators, alongside proprietary synthetic products which can't be found elsewhere. Deriv provides both its own in-house charting software and the hugely popular MetaTrader 5.

Pros

  • Deriv continues to offer fast and reliable 24/7 support and the WhatsApp service is particularly convenient
  • Traders can use multipliers between 1 and 30, with take profit, stop loss and deal cancellation parameters
  • The low $5 minimum initial deposit suits those on a lower budget

Cons

  • The range of 100+ assets trails some competitors such as Quotex which offers 400+
  • There are limited copy trading tools and analysis features compared to alternatives like IQ Cent
  • There's no loyalty program or rebate scheme for high volume traders

#4 - IQ Option

Why We Chose IQ Option

IQ Option is a top-rated binary options and digital trading broker. Trade on a user-friendly platform with a low starting deposit. Simply decide whether the price of an asset will go up or down to win a predetermined payout up to 90%+.

"IQ Option is a good broker for beginners with a slick platform and low minimum investment. New users can also open an account in three easy steps."

- DayTrading Review Team
  • Minimum Deposit: $10
  • Payout %: 91%
  • Copy Trading: No
  • Platforms: Own
  • Instruments: Stocks, Forex, Crypto

About IQ Option

IQ Option is a trusted broker with multi-asset trading on its user-friendly proprietary platform. The broker provides trading on forex, stocks, cryptos, indices, commodities and ETFs with competitive fees and a good suite of extra features and educational content. You can also open an account with just $10.

Pros

  • User-friendly platform for beginners
  • Access to IQ Option community
  • High payouts on binary options

Cons

  • €10 inactivity fee after 90 days
  • No MetaTrader 4 integration

#5 - Grand Capital

Why We Chose Grand Capital

Trade high-low binary options contracts on currencies, metals and cryptos with high payouts. Binaries offer a straightforward bet on the short-term direction of an asset.

"Grand Capital is a good broker for traders familiar with MetaTrader plus passive investors interested in copy trading and LAMM solutions. On the downside, the broker's regulatory credentials lag behind competitors."

- DayTrading Review Team
  • Minimum Deposit: $10
  • Payout %: 86%
  • Expiry Times: 1 minute - 48 hours
  • Bonus: 40% deposit bonus
  • Copy Trading: Yes
  • Platforms: MT4, MT5
  • Instruments: Stocks, Forex, Crypto

About Grand Capital

Grand Capital is a MetaTrader broker with welcome bonuses, trading competitions and an intuitive copy trading service. Several account types and 400+ assets provide trading opportunities for various types of investors and strategies. New users can also open an account and start trading in a matter of minutes.

Pros

  • Demo competitions with cash prizes
  • Wide selection of payment methods and account currencies
  • Accessible minimum deposit starting from $10

Cons

  • Basic education and market research
  • High spreads on some assets
  • Limited regulatory oversight

What Is Binary Options Arbitrage?

Binary Options

Binary options allow you to trade based on two possible outcomes: yes or no. Traders predict the price movement of an asset, such as Tesla stock, and set an expiry time. The price at the expiry will determine whether the trader is ‘in the money’ or ‘out of the money’. Traders can choose from several styles of binary options, including high/low, touch/no-touch and boundary options.

Arbitrage

Arbitrage involves executing simultaneous trades with the aim of benefiting from an asset’s price difference on two different exchanges.

An example of this would be if a company is listed on both the London Stock Exchange (LSE) and the New York Stock Exchange (NYSE) at prices of £5 and $8, respectively. If we assume the exchange rate of $1 = £0.74, there is a difference of £0.92 in value. To capitalise on this discrepancy, you would purchase shares on the LSE and immediately sell them on the NYSE, earning a profit of £0.92.

While this is a small amount, making regular and frequent trades with a greater volume can help to gain larger revenues. This basic example utilised stocks, however, arbitrage is a strategy you can use for many instruments including forex, cryptocurrencies, commodities and, importantly, binary options.

brokers that support binary options arbitrage

How It Works

Arbitrage with binary options involves making both a ‘call’ and a ‘put’ on the same asset. This means that upon expiration, one of your two positions will always be ‘in the money’. In order to make a net profit from this strategy, you will need to find a trade with a payout greater than 100%.

If you just make binary options trades where you earn a profit of $100, but you have invested $200 across the two positions, you will not yield any net profit. In fact, you will likely make a loss when you account for the fees. Because of this, you want to look for highly volatile assets that are more likely to have greater payouts for either option at different brokerages.

It can be difficult to find suitable opportunities for binary options arbitrage due to these specific conditions required. It is also important that when you make this trade that both positions expire at the same time, otherwise you are not completely covered. For example, if one position expires five minutes after the first, the asset’s price could fluctuate, such that neither is ‘in the money’.

Getting Started

Brokers

Unlike arbitrage with other instruments, binary options do not require you to trade on separate exchanges where you may need to consider currency exchange rates. Rather, you are looking for irregularities across different brokers. For this, you will want to find two brokers where one offers greater returns for going high while the other offers better rewards for going low.

As these discrepancies are rare and often corrected quickly, it may be helpful to have an account with a number of brokers offering binary options, such as Pocket Option and Quotex. This will allow you to quickly take advantage of the opportunity before it is remedied.

Assets

When searching for assets with binary options arbitrage, it can be difficult to find potential trading opportunities that satisfy the specific criteria. You are essentially reliant on the market operating inefficiently, which is rare. To help identify these opportunities, you will need to monitor the news for announcements that could seriously impact an asset’s value.

binary options arbitrage platforms explained

Fortunately, impactful news is publicised outside a stock exchange’s trading hours, which can lead to wild speculation over an asset’s price at market opening. Binary options do not operate on any single centralised market and so it is possible to execute trades around the clock, meaning you can take advantage of this speculation.

There are also opportunities with assets that are linked together. A prime example of this is the inverse relationship between the Japanese Yen (JPY) and the price of oil. As Japan imports a lot of oil, JPY sometimes increases following a decrease in oil price. Connections such as these offer exciting binary options arbitrage trades, however, they are riskier as you are reliant on a correlation continuing.

Pros Of Binary Options Arbitrage

Traders looking to use binary options arbitrage techniques enjoy multiple benefits:

Cons Of Binary Options Arbitrage

However, there are some notable drawbacks:

Final Word

Binary options arbitrage is a good strategy with potential for low-risk trades. Opportunities are rare, however, so you need to conduct plenty of research into how these trades work to learn what information you are seeking when identifying assets. Use our list of brokers to get started.

FAQs

Yes, the binary options arbitrage strategy is legal. It is important to note, however, that binary options trading is not permitted in some countries. Check your local jurisdiction’s rules before trading.

What Is Arbitrage?

For binary options, arbitrage means you make trades covering both positions. For example, you make trades for an asset’s price being both inside and outside a price range at a given expiration time.

What Types Of Binary Options Are Available For Arbitrage?

You can use arbitrage on all types of binary options. This includes high/low trades, range/boundary, touch/no-touch and ladder trading. As such, arbitrage can be an appealing strategy for those who wish to diversify their options trades.

Can I Make Binary Options Trades In The USA?

The Commodity Futures Trading Commission (CFTC) says that US-based retail traders may execute binary options trades but they must use regulated exchanges. Make sure to thoroughly research your chosen brokers and check for correct licensing documents.

Can I Use Bots To Identify Binary Options Arbitrage Opportunities?

Yes, algorithms are a great aid for scouring the markets for arbitrage opportunities. It can be difficult to find arbitrage opportunities as they are so uncommon and so having a robot conduct the search on your behalf can speed up the process.