Following Finance Magnates exclusive coverage nearly 1.5 years ago that IntercontinentalExchange (ICE) group – listed on the NYSE under ticker symbol ICE – was looking at developing a binary options product for launch on one of its operated exchanges, that effort has today resulted in the company announcing the launch of Binary Return Derivatives (ByRDs) set to go live this Thursday April 21st on NYSE’s Amex Options’ platform.
The new binary option ByRDs were described as offering limited profit potentials and defined risk for both buyers and sellers, as a listed equity options products, and similar in concept to how binary options are traditionally structured, thus providing a vote of confidence towards these increasingly popular products as one of the largest exchange operators gets behind the new product push.
Trading ByRDs on the NYSE Amex Options platform is based on underlying securities or exchange-traded product (ETP), and offer a fixed return of $100 per contract based on whether the option’s price trades above or below the future strike price (depending on long/short trade direction). In addition, the risk for options sellers, which typically can be unlimited in traditional options trading, is capped at $100 per contract – less the premium received for selling the option – with the new ByRDs contracts.
“The introduction of Binary Return Derivatives, or ByRDs, on NYSE Amex Options gives investors access to a new, simple income-generation tool with the same level of flexibility as standard listed options, plus a straightforward, fixed return,” said NYSE Head of Options Ivan Brown, commenting in the official press release. “We’re excited to offer investors these innovative and solutions-driven investing tools.”
Two distinct ByRD contracts were described in the press release, including the ‘Finish High’ ByRD and the ‘Finish Low’ ByRD, and inline with how high/low binary options are typically classified, where the high references a long call that is bullish whereas the low refers to a short put contract that takes a bearish perspective on the underlying.
Commenting in the press release, Don Montanaro, CEO of TradeKing Group, Inc., a US-based online brokerage said, “At TradeKing, we are always in favor of new, responsible ways for the independent investor to diversify their financial strategies and give them more control over their financial success.”
“ByRDs open up a new opportunity for people to take advantage of the benefits options can deliver, but through a simpler-to-understand, regulated product that can work in up, down, sideways and turbulent markets, while appropriately limiting their profit and loss potential. We’re excited to be a part of the ByRDs’ debut,” Montanaro concluded.