CFTC Binary Options

CBOE, AMEX and NADEX Binary Options

The Chicago Board Of Options Exchange and AMEX both offer binary options that are tradable on any US based stock and options platform. These options offer a simple and easy way to speculate the US market without the worry of potential scams. Because they are exchange listed they carry the same safety and regulation as standard options. The big problem is that not all options brokers offer access to CBOE binary options. Be sure to check with your broker. Another issue I have found is that they are very thinly traded. The better choice for U.S. CFTC binary options is NADEX. NADEX is the North American Derivatives Exchange. NADEX has about 3 dozen international indexes, currency pairs and commodities to trade. The best part of NADEX is that there is a 100% free binary options demo account for you to practice with.

CBOE And AMEX Have A Limited Offering Of Binary Options

The CBOE offers binary options on two underlyings, the SPX and the VIX. Their symbols are BVZ and BSZ respectively. These two binary options trade just the way you think, if the price move in the direction you predict you win and if it moves against you you lose. Payouts on CBOE binary options are $100 regardless of strike or direction, unlike other types of binaries which pay out a percentage of the initial investment. Every CBOE binary option is worth $0 if out of the money and $100 if in the money. Profits and losses are limited to the cost of ownership. AMEX and NADEX binary options trade exactly the same way. AMEX has a few more assets than the CBOE, about 20, but not as many as NADEX. I always recommend that US traders check out NADEX when choosing a broker.

NADEX Has More Strikes And Expirations

There are other differences between CFTC binary options and other types of binary options. European binary options only have one strike, the current price. CFTC binary options have set strikes and are listed with in, at and out of the money options. NADEX expirations are usually limited to the next available expiration for the underlying future contract which could range from a few hours to 3 months. The cost of each contract is listed between $0.01 and $1.00, depending on strike and the price of the underlying. If the May 1475 SPX binary option is listed with an ask of $0.35 it is $35 per contract. If you win you will be paid $100 at settlement for a total profit of $65, $100 – $35 cost to trade.

 

CBOE And AMEX Binary Options Expirations

Unlike the growing on line binary options trading community CBOE and AMEX binary options expire in the third week of each month. This is just like standard equity options. Standard options may be sold or exercised at any time but CBOE binary options are settled European Style and may only be exercised at expiration. You can open or close a position at any time but options can only be exercised on expiration day.  During its life the value of the option will fluctuate with the movement of the underlying. You can sell your positions at the current market price and once the trade is cleared the difference in prices is your profit(loss).

Buy And Sell NADEX CFTC Binary Options

Margin is not required for trading CFTC binary options and there is no pattern day trader rule. The only cash requirement is the minimum of your broker and the cost of ownership. For example: If you sell a short call for a credit of $52 you will be required to maintain a minimum of $48 in your account to cover the risk of the trade ($100-Credit of $52).

Many Advantages Of CFTC Binary Options

Because CFTC binary options can be bought or sold to open they offer many advantages over other types of binary options. Traders can enter into complex strategies that can enhance gains and lock in profits. Traders can even enter into credit positions, something not yet available on any other binary options platform that I am aware of.

For more information go to the CBOE Website

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