If you needed evidence that binary options are not scams but real and respectable financial instruments, you should be satisfied with this article. The New York Stock Exchange (NYSE), the biggest stock and derivative exchange on the planet, just announced that it will introduce a new segment for binary options to be officially listed and traded with transparency on the market. This announcement is also a sign of the growing popularity of binary options among international investors willing to either speculate or hedge their current holdings on a wide range of underlying asset. Nevertheless, the New York Stock Exchange will introduce binary options that slightly differ from the ones you can trade through regulated brokers in the United Kingdom, these new instruments will take the form of Binary Return Derivatives Options.
Differences with traditional binary options
This new type of binary options will be a little more complex and advanced than regular binary options proposed by UK brokers. Binary Return Derivatives Options will be options with a per-contract fixed return amount of $100.00. This means that whatever the underlying, expiry or option type, the maximum payoff of the option will always be $100.00. It will not be a variable return on the invested amount, as it is the case for traditional binary options. The other difference with traditional binary options is that you will have to pay a premium for these options and it is the premium level that will be conditional to the underlying, the maturity… This premium level will evolve over time and converge to either 0 or $100.00 at expiry. This new instrument is binary in the sense that you either get $100.00 at maturity or you lose the invested premium.
As for HIGH / LOW binary options, you will need to choose a direction for the underlying price evolution (bullish or bearish) and a time horizon (please note that the shortest expiry for Binary Return Derivatives Options listed on the NYSE will be one week).
An interesting alternative for US traders on the NYSE
This new kind of binary options, more complex and officially listed, was mainly built for institutional investors that want to benefit from the multiple advantages of this new binary instruments. Experienced individual traders in the US will also be able to try and benefit from this new tool as US residents are not allowed to directly trade with binary option brokers due to strict regulation barriers. The only participants that were so far allowed to provide binary options to US residents were also exchanges, the Nadex and the CBOE.