Pair options trading are nothing but determining how one instrument trades in relation to other. As the name explains, Pair options combines two instruments either within an asset class (such as Google vs. Apple) or instruments between different asset classes (Gold vs. Apple).
In case you were wondering, the entire concept of pair option trading is not a new concept by any means. It has been used by traders as a market neutral strategy for many years because it has proven to be reliable and effective. Many closely related strategies have been formed from using the basic premise of pair options strategy too.
Pairs trading is best suited for traders who are bullishly or bearishly biased toward a certain stock, but who remain nervous about sector-specific or market-wide shakeups. The investor is hesitant to risk precious capital by purchasing a lone call or put, and thus wants to hedge his/her bets.
Unlike Binary Options which you pick a single asset from any of the commodities, stocks, indices or currencies and decide whether the price will go up or down in a given time. Pair Options are directly usually more about the company stocks where you pick which one from a two will out perform the other.
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