CHAPTER 1

Key Features of a Binary Option Contract

This chapter covers the key features of a binary option contract at the Nadex Exchange, which offers over 20 different underlying markets to trade over 300 strike price ladders. It is a regulated exchange and is virtually the only game in town for regulated binary options traded at the retail level. Later in the chapter, we’ll discuss the three basic strategies of trading—At-the-Money, In-the-Money, and Out-of-the-Money—as well as the role of the market maker in the process. The chapter will end with a sample bid/ask scenario.