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In a previous post I mentioned the many online articles which purport that there are Binary Options Arbitrage strategies. I went through many of these articles hoping that there would be a true Binary Arbitrage strategy.
In other trading venues arbitrage trading is a virtual guarantee in profit. In a simple case it involves price discrepancies of the same asset or similar assets across different markets. If you can identify these discrepancies you can lock in profit by buying the asset at the lower price and selling it at the higher price thus ensuring a profit.
It is not easy to identify these price differences and they usually amount to very small spreads so that you must make large transactions to generate meaningful profits. Arbitrage is therefore left to larger institutional traders or those with extremely sophisticated software.
The question is can Binary Options trading, which is simple in execution, provide any arbitrage opportunities. The simple answer is no. Several sites talk about using arbitrage by buying a call with one broker and buying the same put with another or buying a touch option on the one hand and a no touch opton on the other. With Binary Options it doesn't work.
Even though different brokers may offer different payouts for the same assets, you can never guarantee a profit on the trades.
Let's take the Touch/No Touch Binary Option as an example. If one broker offers a payout of 85% and the other offers a payout of 80% the only thing you guarantee is a loss of at least $15. On one side you will for sure win $80 or $85, but on the other you will lose $100.
In conclusion, although many sites claim there is a Binary Options arbitrage strategy, in reality there is no true guaranteed profit Binary Arbitrage opportunity.