any one playing binary option?

Discussion in 'Options' started by gobar, Jun 29, 2008.

  1. gobar


    CBOE will start binary otpions on july 1st.
    its pretty simple but after reading couple of articles i cant firgure the price.

    CNBC says it pay will be 100 or nothing (fast money john nagrajan) while in reuters article state that 1000 or nothing..

    any idea guys?
    In europe binary options r very popular.
  2. cdowis


    There are several websites which specialize in binary options, giving the trader specialized tools to trade them.

    I would suggest looking at some of these botique shops if you are thinking about going into that type of trading.

    Basically it looks a whole lot like gambling to me.

    I ran across an example of such a site which explains how things work, and you can open a simulated account. US residents are not allowed to open a real account.
  3. Guys, how are the binary options that much different that vertical spread positions? I know they'll be much easier to trade, but on initial glance, there seems to be no advantage to binaries. I traded these on a betting exchange while in England many years ago, they are a neat product, any ideas????
  4. MTE


    The vertical has a range of outcomes between the strikes plus a max profit/loss if outside the strikes. In a binary it's just a max profit/loss, no range.
  5. so a market maker could sell you the binary and hedge it with an offsetting vertical spread... giving him better odds and higher probabilities to profit, since he is exposed to both the range between the strikes as well as the max profit/loss.

    You, the binary option buyer, can only profit (or lose) if the outcome is outside of the two strikes, thus less probabilities of success.

    As a buyer, the product doesn't sound as appealing.
  6. Right, but it could be an interesting tool if they had daily expiration sets, instead of monthly.
  7. The shorter the timeframe, the more can be attributed to randomness.

    Add to that the nature of these options, and it sounds like punting on either red or black.