Just seen this commercial on Bloomberg for NADEX. Seemed interesting and wanted to know more. Anyone know anything about http://www.nadex.com and where it is going?
Not accurate . OP A regulated exchange for binary options trading from a reputable trading group , you should try a demo for a long time and see yourself , binary options prices fluctuate between 0-100 then settle on one of them , trade the weekly or daily options forget about shorter periods ....
I didn't say it's not regulated, gambling industry is also regulated. What I meant is that the odds are against you. Prove me I am wrong.
why would you want binary options when you can just buy vertical option spreads? The only reason this would be fun is if you could be on non-market events, just like the old TradeSprots/InTrade.
Yes there is , its an exchange they have a MM you can be one and you can bid and offer inside the spread ...
not all binaries are created equally. Just like there are pink sheet stocks and listed stocks etc.. I would agree that binaries on the over the counter bucketshops are gambling as they do not have the regulation,most of them you can't close them before expiration, and the broker is the counterparty, and are not on a true exchange for forex, commodities and indice binaries. However, Nadex does not set the prices, the market maker sets the prices. Nadex is the North American Derivatives Exchange regulated by the CFTC which regulates the CME not the Nevada Gaming Control Board. The prices are not set by them and the prices are not random. Though without a full understanding of binaries I can certainly get how it would seem that way. A binaries price is simply the delta of a call at that strike with that same expiration time. ie here is an example of CME futures on ES expiring Friday versus Nadex weekly binaries on US 500 which follow ES) expiring Friday at the same time. Notice how the binary price is about the same as the mid price of the delta of a close strike. If the market maker messed with this they would create arbitrage opportunities against them they have to use the black scholes formula to derive delta which is how they obtain the binary price. Also notice there are multiple levels of instant quotes availble along with another smaller trader placing a buy (becoming the best bid) inside the bid ask spread therefore the trade is impacting the price as well. This is like any other exchange based market where it is fill or reveal. http://content.screencast.com/users...35-4a0c-a4b7-fbec800d4cc8/2014-02-03_1516.png You can enter and exit before expiration as stated previously this is a big key. Simply buying something and holding it till expiration with no risk management or take profit plan or ability to control this would be gambling as it would be on any trading instrument. Since the price of a binary is the delta of a call strike with the same expiration it will have the same gamma for changing the delta/price. Therefore, the longer till expiration the slower the price will move. This could be good or bad depending on the type of trader you are. Personally I rarely trade the weeklies except on Thursday/Friday. I trade dailies and a lot of intradays. However on intradays I am focusing on premium collection in which case the odds are for you. For example i am selling a binary strike that is already in the money (above the market) if the market moves down, stays flat i will profit. But to manage risk i will either A exit if the underlying market hits my strike or B trail my stop and have a high success rate with this strategy. Nadex has two completely types of different contracts. Once of them is binaries as discussed. The other one is spreads. Why are these better than vertical option spreads? They are cheaper so you can better ratio your size to your risk. They don't have a week or month etc.. till expiration so you pay less for time decay.. this also results in much higher delta and much higher gamma. You can do them nearly every single hour 2 hour expirations, 5, 7, 23.5 etc.. hour expirations so there is almost always a low risk spread trade with low theta high delta and high gamma. This is much better than trying to day trade a vertical option spread as you will make more per dollar risked with the higher delta and gamma (they use a simple black scholes model) I use these for larger expected moves or to do a straddle before a news event where i have the stats on the expected move based on historical moves on that instrument for that announcement. I know I'm new here have been on a while but not posted. I will be glad to answer any questions if you have them. I trade Nadex pretty much every day.
jackieo79 Is there any broker that offers Nadex binaries to non-US clients , like what PFG used to do ?