Do you like to invest in stocks? The growth of the free market and large corporations means that there are many companies, in all sectors of the market, which compete on the stock market. Making money from stocks is not difficult if you know the right techniques and act wisely. However, if you wish to make huge profits, you should know of more advanced concepts such as binary options, pair trading and Market Neutral trading. Pair trading involves combining and comparing the stocks of two or more companies working in the same sector, (e.g. Google and Yahoo). You have to predict which stock would perform better. If the stock you have backed for a better performance does indeed perform better, you receive a profitable return. This return is known as a payout.
The extent of the payout depends upon the pair option type and market conditions. However, if you employ a good Pair options trading firm, you can get payouts as high as 45 percent. One of the biggest advantages of pair trading is that the overall position of the securities market does not affect you. This is because only the relative position of two stocks is used to determine your payout. The absolute value of each stock is irrelevant. The method of calculating possible payout on pair trading is simple. It is the summation of the value of the chosen pair trading option on the opening day, and the percentage returns on your option, if it were to perform better.