Bungees
Bungees are unique limited risk trades that stay 'alive' even when your safety level is breached, giving you the chance to bounce back into profit. Our built-in 'Floor' or 'Ceiling' ensures that the price will not exceed the stated level, however far the underlying market may move.
With a Bungee you know that your trade cannot settle at any worse than our Floor or Ceiling level, whatever happens to the underlying market. And because your position remains open even if the underlying market is currently through your safety level, you can still make a profit if the market comes back later in the day.
How do Bungees work?
Every Bungee has a built-in Floor or Ceiling level, beyond which the Bungee price cannot move. This means that a Bungee is a strictly limited risk proposition.
The Floor or Ceiling of a Bungee works very much like a Stop level, as it ensures that you cannot lose more than a given amount on your position. But there is one key difference: if the underlying market breaches the Floor or Ceiling level, your Bungee position stays open. So if the underlying market swings back to your favour later in the day you can still make a profit. This is especially useful in volatile markets where sudden dips and blips can interrupt the general trend of the market.
Please note that this graph is intended purely to indicate the general relation between the level of a Bungee and the level of the underlying market and does not correspond to any actual price data.
On any given trading day we will offer a range of Bungee Buys, with a built-in Floor level, and a range of Bungee Sells, with a built-in Ceiling, against selected underlying markets. For instance, we may offer a Bungee Buy on Daily Wall Street with a Floor of 8300. The price for this Bungee cannot therefore move any lower than 8300, however low the underlying market (i.e. Daily Wall Street) may fall.
If your Bungee position is still open at the expiry time it will be settled at the official closing level of the underlying market, or at the Floor/Ceiling level if the official closing level is currently beneath/above the Floor/Ceiling.
Please note that it is not possible to 'sell' a Bungee Buy or to 'buy' a Bungee Sell, and you cannot place regular Stop or Limit Orders on any Bungees.
For more detail please see our Bungees Example.