A binary option is a financial product where the parties involved in the transaction are assigned one of two outcomes based on whether the option expires in the money. Binary options depend on the outcome of a "yes or no" proposition, hence the name "binary."
What is Nadex binary options?
Nadex is a regulated binary options exchange in the U.S. Nadex binary options are based on a "yes or no" proposition and allow traders to exit before expiry. 2 The binary option's entry price indicates the potential profit or loss, with all options expiring worth $100 or $0. Let's assume stock Colgate-Palmolive is currently trading at $64.75.
What happens if a binary option expires?
Traders receive a payout if the binary option expires in the money and incur a loss if it expires out of the money. Binary options set a fixed payout and loss amount. Binary options don't allow traders to take a position in the underlying security. Most binary options trading occurs outside the United States.
Do binary options trade outside the United States?
Most binary options trading occurs outside the United States. Binary options have an expiry date and/or time. At the time of expiry, the price of the underlying asset must be on the correct side of the strike price (based on the trade taken) for the trader to make a profit.
