Introduction to Binary Options - Sponsored by Nadex
A binary option is a straightforward yes/no trade. At expiration the option will be worth 100 or zero. No other settlement price is possible. That’s why it’s called a binary option.
The option is, however, tradable at any time during trading hours on the North American Derivatives Exchange, or Nadex. There is no obligation to carry the position until expiration.
And because the risk parameter is well defined, there will never be a margin call, only the initial debit cost of the trade. With a binary option trading at 50 ($50 per contract), neither the buyer nor seller will be margined higher than 50 because neither the buyer nor the seller can lose more than their original investment. (Your initial cost is always your maximum risk exposure to the trade)
Nadex Binary options can have various expirations. These can be a week, a day or even 2 hours in duration and the trade can be entered and exited at any time prior to the binary expiration.
Nadex is a US exchange that matches buyers and sellers on every trade in a regulated environment.