UK Markets React To General Election Results – BinaryOptions

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UKGBC reacts to general election result

“As we look back on the results of this 2020 election, we may well refer to it as the first UK election that had the climate crisis at its heart. No longer the preserve of a single party or associated with any one shade of the political spectrum, we know that voters of all political persuasions care about tackling climate change, and every single manifesto had climate promises in response.

“Whatever happens now with Brexit, it is essential that our environmental protections are preserved and further strengthened. 2020 must kick off a decade of unprecedented climate action and the built environment must be at the forefront of that. With COP 26 being hosted in Glasgow, we have a unique opportunity to go further, faster and for the UK to lead on the transition to a green economy.

“Housing and infrastructure were also major issues in this election, so it’s crucial that we recognise the benefits of tackling all these priorities together and ensure that our industry rises to the challenge of delivering a net zero carbon built environment. To coin the now well-used phrase, let’s use the upcoming decade, to get net zero carbon done!”

Article & Image Source: UKGBC

UKGBC reacts to general election result

Julie Hirigoyen, Chief Executive at UKGBC said:

“As we look back on the results of this 2020 election, we may well refer to it as the first UK election that had the climate crisis at its heart. No longer the preserve of a single party or associated with any one shade of the political spectrum, we know that voters of all political persuasions care about tackling climate change, and every single manifesto had climate promises in response.

“Whatever happens now with Brexit, it is essential that our environmental protections are preserved and further strengthened. 2020 must kick off a decade of unprecedented climate action and the built environment must be at the forefront of that. With COP 26 being hosted in Glasgow, we have a unique opportunity to go further, faster and for the UK to lead on the transition to a green economy.

“Housing and infrastructure were also major issues in this election, so it’s crucial that we recognise the benefits of tackling all these priorities together and ensure that our industry rises to the challenge of delivering a net zero carbon built environment. To coin the now well-used phrase, let’s use the upcoming decade, to get net zero carbon done!”

Business leaders react to victory for the Tories in general election

Business leaders across various sectors, including banking, property and leisure, share their thoughts with the Evening Standard’s City desk on the December 2020 general election result.

Utilities

There was a flood of relief from the water industry, a top priority for nationalisation in Labour’s planned first 100 days in government — although investors seemed to have priced in a Tory victory into the UK’s regulated utilities, with most shares up 15% since September.

Industry group Water UK said: “Water nationalisation would have been bad for customers, the environment and the economy — so it’s good news it’s off the agenda for now. But we’ve still got a lot of work to do with ensuring water efficiency is as embedded in policy as energy efficiency.”

The Conservative election victory put a brake on Jeremy Corbyn’s rail nationalisation plans — and rail operators were managed to restrain their jubilation. FirstGroup said the election put “a welcome emphasis on public transport and its importance for both economic growth and decarbonisation.” But Paul Plummer, chief executive of the Rail Delivery Group, warned the new Government needed “to move forwards on a range of domestic issues — including building HS2 and seizing the opportunity to deliver root- and-branch reform of our railway.”

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Energy

The vanquished threat of nationalisation put a rocket up the share price of listed giants including British Gas-owner Centrica and SSE — but industry body Energy UK’s director of policy Audrey Gallacher warned Boris Johnson must “quickly break the hiatus in energy policy”.

The Prime Minister has pledged net-zero emissions by 2050 but Gallacher added: “With just 120 quarters until 2050, there is no time to waste so we look forward to seeing clear policy direction.”

Economics

Economists cautioned the initial exuberance for the markets would probably cool off in the coming months. David Zahn, head of European fixed income at funds giant Franklin Templeton said: “Gilt yields are likely to fall and the pound is likely to strengthen going forward. Risk assets such as corporate bonds will probably rally, too. However, a market relief at a Conservative victory may be quite short-lived as investors pivot quickly to think about what’s next, particularly with Brexit.”

Banking

David Duffy, chief executive of Virgin Money, said: “I would like to congratulate the Prime Minister on securing a clear majority, that will bring some valuable certainty for the country. We are looking forward to partnering with the government in improving investor confidence and providing much needed finance and investment in all regions of the UK — there are huge opportunities to increase productivity and growth outside of London and create a thriving economy, especially for small business.”

Property

Chief executives of estate agents, office developers and housebuilders all welcomed the verdict. OnTheMarket’s Ian Springett hopes it will “restore confidence amongst ‘wait and see’ buyers and sellers” who had put plans on hold.

Paul Williams at Derwent London said “greater certainty is good for business”. Donagh O’Sullivan at housebuilder Galliard said: “I look forward to seeing a significant release of investment — decisions that have been stalled on the back of political uncertainty will now get the green light.”

However, Brian Bickell, Shaftesbury boss said: “One element of uncertainty has gone but long term confidence won’t return until there is total clarity on our future trading and political arrangements with the EU.”

Mortgage brokers and estate agents said they had seen a spike in enquiries as buyers sought to complete purchases following the general election result.

Trevor Abrahmsohn at upmarket estate agent Glentree International said buyers from Asia and Eastern Europe have agreed to respective £28 million and £25 million residential buys in north London following the result. They had been awaiting clarity before agreeing purchases.

Daniel Minsky, director at London-based agency Estate Office, tweeted: “Phone ringing off the hook here.”

Investment fund managers

The UK’s investment industry reacted with bullish enthusiasm. Investment Association chief executive Chris Cummings, who speaks on behalf of funds running nearly £8 billion, welcomed the chance to “promote the UK as the global leader for investment management” with Johnson’s new regime. Investec’s Alastair Mundy said overseas bidders “may seek to buy up cheap UK assets” due to the political clarity.

Hedge funds shorting sterling may have been caught out by the pound’s rally. Polls were accurate this time — unlike Brexit and Trump —lowering the likelihood of burnt fingers in Mayfair hedge fund land.

Media

Sir Martin Sorrell, executive chairman of S4Capital said: “The good news is we now know clearly what the Electorate wants – “get Brexit done” and a rejection of Corbynism. Unfortunately, we won’t know what the trade deal with Europe will look like for some time, maybe even no deal. So some uncertainty remains.”

He added: “For S4 it clearly means we now build our business even more aggressively in the Americas and Asia Pacific. Western Europe remains important, but we have to pivot, like the UK as a whole to different markets including the Middle East and Africa and Eastern Europe. I hope the new government will pursue the “Singapore on steroids” approach. Low tax and regulation-lite, with an emphasis on education, mobility and infrastructure, both hard and soft.”

Retail

Retailers today pushed the new Government to come through on its manifesto pledge and urgently review business rates. British Retail Consortium chief Helen Dickinson said: “We will be bringing that up and making sure that review really takes place and does not tinker around the edges as we have seen before. Given the majority that Boris has the Government can bring a longer-term perspective perhaps more so than we have seen in recent years.”

Helen Brocklebank, boss of luxury goods trade body Walpole, said her industry is looking for “swift and positive” progress on Brexit.

Diamond jewellery retailer Boodles’ managing director Michael Wainwright said: “There are definitely a lot of business people out there who are our customers saying they are ready for a Christmas spend if the Tories get a majority.”

Leisure

Chief executives of pub operators said cheers to the result, including Patrick Dardis at Young’s: “Huge relief — best of a poor lot.” Nick Mackenzie at Greene King said: “We hope that a majority government will bring greater certainty to the UK economy, encouraging businesses to invest and go on to benefit employees and consumers across the country.” He urged the Government to address regulatory and cost pressures facing the industry, such as high business rates.

Kate Nicholls at trade body UKHospitality, which counts restaurant chains as members, tweeted: “Clarity and certainty likely to reduce volatility and that will be helpful for food price inflation.”

The technology industry welcomed the end to “three years of uncertainty” but pressed Government to help address its skills crisis. Russ Shaw of industry body Tech London Advocates said: “Our big focus is on talent. We are just not filling the jobs that we need and the government needs to look at immigration and lifting the cap on Tier 2 visas.” Shaw said Johnson’s support for the technology industry during his time as London mayor was encouraging for the future. Bruce Daisley, European Vice-President for Twitter, said: “I hope this election win isn’t seen as a victory for the most ungracious campaign in living memory.”

Telecoms

Philip Jansen, BT chief executive said: “There are lots of things for the new government to get done, few more important to the UK than speeding up the delivery of full-fibre broadband. Our new Ministers can take some simple, immediate steps to cut through the red tape and help us build like the clappers. We’ve got 33,000 brilliant Openreach engineers ready to roll.”

What You Need To Know About Binary Options Outside the U.S

What Do You Need To Know About Binary Options Outside the U.S?

Binary options let traders profit from price fluctuations in multiple global markets, but it’s important to understand the risks and rewards of these controversial and often-misunderstood financial instruments. Binary options bear little resemblance to traditional options, featuring different payouts, fees, and risks, as well as a unique liquidity structure and investment process.

Binary options traded outside the U.S. are also structured differently than those available on U.S. exchanges. They offer a viable alternative when speculating or hedging but only if the trader fully understands the two potential and opposing outcomes.

The Financial Industry Regulatory Authority (FINRA) summed up regulator skepticism about these exotic instruments, advising investors “to be particularly wary of non-U.S. companies that offer binary options trading platforms. These include trading applications with names that often imply an easy path to riches.” 

Key Takeaways

  • Binary options have a clear expiration date, time, and strike price.
  • Traders profit from price fluctuations in multiple global markets using binary options, though those traded outside the U.S. are structured differently than those available on U.S. exchanges.
  • Non-U.S. binary options typically have a fixed payout and risk, and are offered by individual brokers rather than directly on an exchange.
  • While typical high-low binary options are the most common type of binary option, international brokers typically offer several other types of binaries as well.

Binary options outside the U.S. are an alternative for speculating or hedging but come with advantages and disadvantages. The positives include a known risk and reward, no commissions, innumerable strike prices, and expiry dates. Negatives include non-ownership of the traded asset, little regulatory oversight, and a winning payout that is usually less than the loss on losing trades.

Understanding Binary Options Outside the U.S

What Are Binary Options?

Binary options are deceptively simple to understand, making them a popular choice for low-skilled traders. The most commonly traded instrument is a high-low or fixed-return option that provides access to stocks, indices, commodities, and foreign exchange.

These options have a clearly stated expiration date, time, and strike price. If a trader wagers correctly on the market’s direction and price at the time of expiration, they are paid a fixed return regardless of how much the instrument has moved since the transaction, while an incorrect wager loses the original investment.

The binary options trader buys a call when bullish on a stock, index, commodity, or currency pair, or a put on those instruments when bearish. For a call to make money, the market must trade above the strike price at the expiration time. For a put to make money, the market must trade below the strike price at the expiration time.

The broker discloses the strike price, expiration date, payout, and risk when the trade is first established. For most high-low binary options traded outside the U.S., the strike price is the current price or rate of the underlying financial product. Therefore, the trader is wagering whether the price on the expiration date will be higher or lower than the current price.

Binary Options Outside the US

Foreign Versus U.S. Binary Options

Non-U.S. binary options typically have a fixed payout and risk and are offered by individual brokers rather than directly on an exchange. These brokers profit from the difference between what they pay out on winning trades and what they collect on losing trades. While there are exceptions, these instruments are supposed to be held until expiration in an “all-or-nothing” payout structure.

Foreign brokers are not legally allowed to solicit U.S. residents unless registered with a U.S. regulatory body such as the Securities and Exchange Commission (SEC) or Commodities Futures Trading Commission (CFTC).

The Chicago Board Options Exchange (CBOE) began listing binary options for U.S. residents in 2008.   The SEC regulates the CBOE, which offers investors increased protection compared to over-the-counter markets. Chicago-based Nadex also runs a binary options exchange for U.S. residents, subject to oversight by the CFTC.

These options can be traded at any time, with the rate fluctuating between one and 100, based on the current probability of the position finishing in or out of the money. There is full transparency at all times and the trader can take the profit or loss they see on their screen prior to expiration.

They can also enter as the rate fluctuates, taking advantage of varying risk-to-reward scenarios, or hold until expiration and close the position with the maximum gain or loss documented at the time of entry. Each trade requires a willing buyer and seller because U.S. binary options trade through an exchange, which makes money through a fee that matches counter-parties.

High-Low Binary Option Example

Your analysis indicates the Standard & Poor’s 500 index will rally for the rest of the trading day and you to buy an index call option. It’s currently trading at 1,800 so you’re wagering the index’s price at expiration will be above that number. Since binary options are available for many time frames—from minutes to months away—you choose an expiration time or date that supports your analysis.

You choose an option that expires in 30 minutes, paying out 70% plus your original stake if the S&P 500 is above 1,800 at that time or you lose the entire stake if the S&P 500 is below 1,800. Minimum and maximum investments vary from broker to broker.

Say you invest $100 in the call that expires in 30 minutes. The S&P 500 price at expiration determines whether you make or lose money. The price at expiration may be the last quoted price, or the (bid + ask)/2. Each binary options broker outlines their own expiration price rules.

In this case, assume the last quote on the S&P 500 before expiration was 1,802. Therefore, you make a $70 profit (or 70% of $100) and maintain your original $100 investment. If the price finished below 1,800, you would lose your original $100 investment.

If the price expires exactly on the strike price, it is common for the trader to receive her/his money back with no profit or loss, although brokers may have different rules. The profit and/or original investment is automatically added to the trader’s account when the position is closed.

Other Types of Binary Options

The example above is for a typical high-low binary option—the most common type of binary option—outside the U.S. International brokers will typically offer several other types of binaries as well.

These include “one-touch” options, where the traded instrument needs to touch the strike price just once before expiration to make money. There is a target above and below the current price, so traders can pick which target they believe will be hit before the expiration date/time.

Meanwhile, a “range” binary option allows traders to select a price range the asset will trade within until expiration. A payout is received if price stays within the range, while the investment is lost if it exits the range.

As competition in the binary options space heats up, brokers are offering additional products that boast 50% to 500% payouts. While product structures and requirements may change, the risk and reward is always known at the trade’s outset, allowing the trader to potentially make more on a position than they lose. Of course, an option offering a 500% payout will be structured in such a way that the probability of winning the payout is very low.

Unlike their U.S. counterparts, some foreign brokers allow traders to exit positions before expiration, but most do not. Exiting a trade before expiration typically results in a lower payout (specified by broker) or small loss, but the trader won’t lose their entire investment.

The Upside and Downside

Risk and reward are known in advance, offering a major advantage. There are only two outcomes: win a fixed amount or lose a fixed amount, and there are generally no commissions or fees. They’re simple to use and there’s only one decision to make: Is the underlying asset going up or down?

In addition, there are also no liquidity concerns because the trader doesn’t own the underlying asset and brokers can offer innumerable strike prices and expiration times/dates, which is an attractive feature. The trader can also access multiple asset classes anytime a market is open somewhere in the world.

On the downside, the reward is always less than the risk when playing high-low binary options. As a result, the trader must be right a high percentage of the time to cover inevitable losses.

While payout and risk fluctuate from broker to broker and instrument to instrument, one thing remains constant: losing trades cost the trader more than they can make on winning trades. Other types of binary options may provide payouts where the reward is potentially greater than the risk but the percentage of winning trades will be lower.

Here’s how the City of London is reacting to Theresa May’s shock failure to win a majority

The City of London, which had widely been preparing for a Tory majority, was shocked by the result, with the pound dropping sharply as an exit poll showed that the party would fall short.

Away from the pound, market reaction has so far been reasonably muted, with the FTSE 100 actually opening a little higher and safe haven assets like gold little moved.

However, the election will understandably be all that anyone in the City is talking about on Friday, with analysts, strategists and traders all sharing their opinions about what the result could possibly mean for the markets, as well as the UK’s broader economy.

Business Insider has rounded up some of the best reactions so far. Check them out below:

Kallum Pickering, economist at Berenberg

The early speculation is that the Conservatives and the pro-Brexit DUP (Democratic Union Party – N. Ireland) could enter a coalition.

But with 329 seats between them, the working majority would be very slim. No doubt there will be speculation of another Conservative-Lib Dem government. But the Lib Dems want another referendum on Europe. That would be a tough sell for the Eurosceptics in the Conservative Party.

Dean Turner, economist at UBS Wealth Management

“Markets were not primed for the prospect of uncertainty today. The dramatic change to the political and economic status quo will be unsettling to investors.

“The purest way of playing macro-political risk is through sterling, and we may see a good deal of the markets’ worries played out through currency. The short-term outlook points to higher volatility. In the first instance, it is likely that the pound will give up the bulk of its post-election announcement gains.”

Lee Hardman, currency analyst at Mitsubishi UFJ Financial Group

“The consensus that this election was all about consolidating Theresa May’s leadership is now shattered. Market hopes were pinned firmly on a stronger mandate as the UK government begins Brexit negotiations. Without question, there is volatility ahead. The market is desperate for any indication of what a Brexit deal might look like.”

Mike van Dulken, head of research at Accendo Markets

“As it stands, this could go down as one of the most impressive political backfires in UK history. After Brexit, of course.

“From a position of apparent strength less than six weeks ago, it looks very likely that PM May will see her parliamentary majority erased. A Conservative loss of outright power would surely call into question her own position as Tory leader after less than a year. Strong and stable leadership? Not recently, with a series of policy faux-pas and embarrassing U-turns. The question now is whether she will still be leading the ship when the UK begins its looming Brexit negotiations.

“A hung parliament was the most extreme scenario forecast; a Labour win was never on the cards. Once again, however, markets have been surprised by how voters cast their ballot. But the market reaction thus far has been remarkably sanguine. Panic it is not. Although uncertainty is once again rife.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics

“Britain’s inconclusive election means it is a question of when, not if, the country heads to the polls again in the near future. As the largest party, the Conservatives now have the right to attempt to form a new government. An alliance with the Democratic Unionist Party—a Northern Irish Right-leaning party which has won 10 seats—would give them a slender majority.

“But it is doubtful such an agreement would last long, given the tendency for Governments to lose seats in by-elections. The DUP also likely will have red lines on Brexit, given Northern Ireland’s close economic ties with the Republic of Ireland, which may be too much for Eurosceptic Tory MPs to stomach.”

John Wraith and team at UBS

“A hung parliament increases domestic uncertainty and clearly complicates the UK’s position at the upcoming EU negotiations. In the near term, the market may reflect this via a weaker pound, but we would caution against chasing cable lower from here.

“Today’s result will in part be seen as a vote against a definitive break from the EU, and the market may soon begin to reassess the probability of a so called hard Brexit. A Tory minority may have to make concessions in the direction of a softer exit (which the other EU countries may also be willing to accommodate, for example via a more generous transitional period than otherwise).”

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