# Arbitrage with binary options

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 Author Topic: Arbitrage with binary options  (Read 1701 times)
tony123
Newbie

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« on: February 01, 2016, 02:54:27 PM »

Hi,
has anyone ever tried to make arbitrage using binary options?
it's possible if you use a peer to peer website.
how you do it?
1. go to a website that allows you to write bo to other traders (good example is tradequal but 99% of the brokers allow you only to buy options from them)
2. write binary option and offer the buyer a payout that is a little bit higher than the payout in the order book let's say 100\$ with 87% payout so if you win you get 100\$ and if you loss you will pay 87\$.
3. write another option on the opposite side  and offer a payout that is over 100% (crazy high payout in binary options market) but not higher than 113% with amount that is makes you get your arbitrage. let's check 95\$ with 100% payout so if you win you get 95\$ and if you loss you will pay 95\$- if you win the first option it means that you lost the second one (opposite) so you will get: 100-95= 5\$ and if you lose the first option and win the second one you will get: 95-87=8\$ so you can see that you win no matter what!

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MUCHBET
Probably a Pro

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« Reply #1 on: February 01, 2016, 05:47:51 PM »

nice idea!
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Racerman
Newbie

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« Reply #2 on: February 01, 2016, 06:07:21 PM »

Is it good liquidity at, let's say, TradEqual?
I guess that would be the big risk here not getting matched in time.

And are there not any fees on winnings? It seems a bit to good and easy to be true
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tony123
Newbie

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« Reply #3 on: February 02, 2016, 11:28:35 AM »

The liquidity should concern you only when you want to write the second option and you can assume that most of the times there will be someone that want to buy binary option with that payout.
As I'm sure you know where there is full liquidity there is almost no arbitrage
There is fee of 1.5% only on winnings
One other thing you can do to "hunt" arbitrages is to wait for times where the highest payout on the order book is less than let's say 70% and to try to write an option with 71%-80% payout to the buyer' if you succeed so you can go and buy the same option in another website and get 80% more or less and if you wrote the first one with 100\$ so you earn 100\$ (97.5\$ after commission) or lose 71\$ and if you buy the same option with 80% in  94\$ than you earn 75\$ or lose 94\$ and on the overall you win 3.5\$ (net) or 4\$
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brapp
Newbie

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« Reply #4 on: February 11, 2016, 08:38:27 AM »

Some other broker exchange of binary options?
thanks
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Bubbles
Getting better

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« Reply #5 on: February 11, 2016, 02:35:55 PM »

I don't know where TradEqual is located but in the UK there were people prosecuted for tinkering with binary options, they called it “market manipulation”, in the past. Needless to say, it was about hundreds of thousands of GBP, not a few dollars but still make sure you're on the safe side.
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ilovethisforum
Getting better

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« Reply #6 on: February 25, 2016, 04:05:25 PM »

I have made an account in their site,so i will tell you what i know for them.They were really helpfull and the also telephone me to tell me about their site and what they are doing.The idea is very good,they are trying to be the "betfair" in binary options market.They are the only site that they offer to write an option,all the others are just brokers that they will always have the odds in their favor.I have spot 2 problems:
1) because they are very young(6 months only) they don't have great liquidity,so you have to wait a lot for your options to be bought.For this problem you can use their live chat and talk with other people that they want to buy something.
2)The "pure" arbitrage that we can do in sports betting,there isn't possible in binary options because the market price that you can write or buy an option isn't determined my us,it \s always changing because the prices change.
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