Anticipation is mounting over the results of the elections being held today in Greece. Although we won’t know what the final status of Greece’s future in the Eurozone will be until sometime early tomorrow, we are left to speculation for now. One possible outcome is that the right wing political party will win the elections and as a result, will remain in the Eurozone and as such, Greece will finalize the bailout and move forward. More on that in a minute. The other scenario is that the left wing will take the elections and the result will be a pull-out from the Eurozone and a likely collapse of the Greek economy. Albeit, a controlled collapse, it’s still not good news for Europe.
Any such scenario will leave the country’s already battered economy, in utter shambles. But that’s not what worries economists. It’s the aftershocks which will be set off in the aftermath of this result. Banks, which have waited for Greece’s bailout in order to be able to sell Greek government bonds, will be unable to liquidate those assets at even a partial loss. This will send banks reeling and as a result, many European banks holding these assets may face a daunting task of recouping losses by other means. Some banks may collapse. This, in turn, will cause yet other banks and institutions which hold those banks’ bonds and stock to possibly face closing. So in short, we are facing a very serious and precarious precipice here.
This is what is called the domino effect. One relatively small and seemingly innocuous economic event (Greece is a very small piece of the Eurozone puzzle) that can cause a series of collapses. This basically threatens all of Europe and binary options traders will be keen to watch the results of this election as it will surely weigh heavy on current positions in the market. We expect most of our readers to remain awake to hear what he results of this election are and take necessary steps as the market opens to either mitigate risk via hedging or speculate by opening new positions. We will update in the morning about the results as well as answer the question of “what now”.
Of course, our doomsday prophecy here is not gospel. Binary options traders know very well that the right wing party could in fact win the elections, leaving Greece firmly in the Eurozone with a bailout package. This scenario surely will have its negative impact. But the truth of the matter is that it will likely be felt almost entirely in Greece (possibly Cyprus as well) but that’s it. Europe will be out of the woods and likely worry free, at least until we better understand Italy’s situation and whether 100 million Euros will be enough for Spain or not.
Based on this, we are calling our readers to err to the side of caution. Binary traders probably don’t have many open positions at the moment as the majority of them are likely squared off prior to the weekend. However, if you have one touch or end-of-month expiries open at the moment- be prepared to hedge yourself.