You have yet to address the proofs i have given on all your original arguments and are conveniently turning it towards touch.. No problem i get it you don't have any evidence to counter what i have exhibited just theoretical statements that in no way help a trader improve or even disprove accuracy and have yet to combine proof and you wrap it up with insulting comments. I guess that makes you feel big. I was explaining how I do "i guess to make it palatable" a "target touch" on Nadex. I target a strike i can do this intraday, daily or weekly. I can open close etc.. I don't have to wait until it touches I could close sooner. I can trail my stop up if i would like to further increase my payout. or for the "touch target" i get out when it hits the strike at the price of 47. I'm not sure why this is so hard to understand. I'm not explaining a discovery just simplicity of pricing and how to take advantage of a target price. Which is what you are also doing on a touch you expect a price to be hit by x time. You stated "wow what a discovery" yet you stated the following ....its how it works Originally Posted by jackieo79 View Post *Delta of a call strike when the price of the underlying market is at the strike of a call option the delta will be 50 if the underlying market is at the strike of a binary the mid price will be 50 (this is not the price of an Vertical spread when ATM) If you would like me to do a comparison no problem what platform would you like me to look into to compare the touch? So I can make sure I'm looking at what you want to compare. Your talking about 100/100 barriers and smiles and strips..... great... but whatever what is your point? Where is the application. You have taken down brokers etc.. etc.. I'm sure you can figure out how to make this work to your advantage but obviously your goal is simply to be condescending contradictive and offer no evidence along with your vast option knowledge that offers practical application that a trader can use to either say hey this helps me or it hurts.
Don't apologize just go away really? If you don't like it this is a question about Nadex. You don't like it you go away your the one that keeps coming in with rude comments, showing your option prowless and evidence or substance to back up any claim you have made or counteract the evidence i have shown.
The only way I use short term binaries is for premium collection. Buying or selling a ITM binary I do this around the clock and use stops if my strike is hit I exit to ensure proper risk management. Time passing price in my favor, price flat, price against me slightly i profit on the trade.
So Nadex Commissions where capped at $9.00 and $9.00 if settled ITM or closed before expiration. (No fee if settles OTM) What would your fees be if you did 1,000 option contracts? In response to: As I responded earlier all exchanges have bid/ask spreads and fees and theirs are comparable. I've seen no evidence to the contrary. I've already been trading them 2 years now. But I understand its not for everyone. To each his own. http://www.elitetrader.com/vb/showth...=281824&page=3 http://www.elitetrader.com/vb/showth...=281824&page=4
No by all means chime in. Thank you for clarifying. Maybe I was not clear and I totally see what you are saying. Please let me clarify as the issue hear is are they poorly priced and what is an accurate pricing model. A vertical yes would be a better comparison on payout risk reward etc.. due to the capped nature of a vertical. But the simplicity of pricing for a binary is the delta of a call. I am in not comparing a digital tiered nadex binary it to an outright option purchase. I am comparing its price to be the same formula that is used to determine the delta the outright option delta with the same strike and expiration. A delta also has a fixed number 0 to 100% So yes the price of the binary will not exceed 100. As exhibited here you can see up and down both price ladders the binaries prices corresponds directly with the calls delta. The screenshot or math or whatever is simply to prove that this is an accurate pricing model. http://content.screencast.com/users/Stephen08540/folders/Jing/media/c5429501-62fd-48a3-bd6e-71b057240ea5/2014-02-04_1823.png This is not about a single strike move. This is pricing what a binary should be worth right now. If i wanted to price out what a xyz market binary with ##### strike with an expiration of ##.## with x days/hours/minutes remaining to expiration, x distance from the underlying market, and the current IV then i can know with a good precision what the binary should be priced at right now and then determine if it is over or under valued or accurately priced. Just like in any type of option you trade time, price relation to strike(s), and volatility will change the price over time. The delta will likewise change as time passes, vol changes, and price moves. The binaries price will change likewise the same corresponding amount as time passes, vol changes, and price moves. I hope that makes sense. Pricing model not P/L comparison. I will do a comparison of a vertical versus a binary on risk/reward payout benefits, cost, bid ask spread as well for helping to determine which has more advantages or disadvantages in a follow up post.
Simplicity doesn't make it correct. You're still wrong. You cannot disassociate the vertical from the digital simply because you admire the simplicity of your erroneous comparison to a vanilla call. The digital is delimited, capped, just as the vertical. "sle" is a exotics book runner for banks (formerly) and hedge funds as well as being published in peer-reviewed journals. He's telling you that you're FOS, so stfu and listen. You don't have to know why to accept it.
I never said simplicity does make it correct. But simplicity does not make it incorrect either. Might want to think on that one as I think you like to make things complex to sound smart. I like to make them simple as possible to make them applicable. Why must i post the same thing to you posting th same thing over and over again. I do not compare it to a vanilla call. I compare it to the formula for calculating the delta of a vanilla call. Maybe you missed that part. The delta is also capped just like the binary. He did not say i am FOS etc.. speak for yourself...I have no issue with SLE and that is awesome that he has strong experience. But the fact still remains you can not prove me wrong. Delta of a underlying binary same strike same expiration - with a same strike binary same expiration - are the same approximate formula. You insist so strongly I am wrong. Well come on it should be simple pull up a underlying option chain with delta and pull up a nadex binary strike ladder and show me.... Prove I am wrong. Find me a weekly binary that's price does not match the binary of a liquid underlying markets call strike beta. Bring it show me how smart you are and that I am wrong. Please do so. I will gladly admit it IF you can find any evidence to the contrary. Quit all your theory and opinion non-sense and provide some counter proof. You hurl insults and like to say I am wrong but you have yet to offer any counter evidence at all. Not even one single shred.
Again I would expect nothing less than a insult combined with a statement without substance from you. The very reason (knowledge) I do the short term binaries is to collect on time and potentially price. Get maximum theta decay, combined with high gamma requiring minimal or no price movement. Gamma is the price of your vega so the closer to expiration the higher your gamma and the lower Vol (vega). Therefore vega has more impact on an impact on the options price and the closer you are to expiration the less impact vega has. Therefore I choose the short term binaries to minimize vega impact and capitalize on theta and gamma. As an example see Vega Decrease on the same strikes on options with less time to expiration. And though IV will be yes somewhat higher closer to the expiration the VEGA is still dramatically lower. http://screencast.com/t/au2S8jnWQf Im sure you will have some counter active smart comment with an insult saying I am wrong providing a bunch of jargon but offering no substance to any trader on here helping them learn to trade better nor proving that this strategy is a bad idea. in response to...