Exclusive: NYSE Eyes Dual Binary Return Derivatives Options (ByRD) Offering

The New York Stock Exchange (NYSE) is expanding its options suite with the launch of Binary Return Derivatives Options, yielding

nyseThe New York Stock Exchange (NYSE) is expanding its options suite with the launch of Binary Return Derivatives Options, yielding a per-contract fixed return amount of $100 in two forms.

Binary options have rapidly permeated many brokers’ offerings, keeping up with the steadfast demand from investors – conversely, regulators have been equally as busy clamping down on illicit and unauthorized activity from numerous binary options providers.

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Alternatively, there are a number of solid binary options platform providers that have helped the industry gain traction. NADEX and Cantor Exchange are the bellwether providers in the United States, obtaining CFTC approval. The decision by the NYSE to also launch a binary options offering is testament to the growing popularity of this instrument.

That the NYSE is introducing binary options represents an interesting dynamic to an already robust product line that includes a pantheon of bonds, ETFs, equities and options. Binary Return Derivatives Options (ByRDs) effectively qualify as binary options, complete with a per-contract fixed return amount of $100.00.

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ByRDs will be offered in two forms: Finish High ByRDs represents a standard listed call option, declaring a bullish stance on a given security. These long contracts return the invested $100.00 if the NYSE ByRD settled value closes above its respective strike price upon expiration on Friday. Conversely, the Finish Low Byrd is the antithesis of this movement, taking a bearish stance and aiming for a close below the strike price.

ByRDs differ from the rest of the NYSE listed options across its settlement process as well as its profit and loss attributes. In particular, ByRDs are cash-settled, as opposed to physically settled via standard listed equity options.

Moreover, a Finish High ByRD has a maximum settlement value of $100.00, yielding a maximum profit potential of $100.00. Ultimately, investors must weigh the same risks here as similarly offered binary options by other brokers, etc. It will bear watching whether other entities in the United States also utilize similar offers given the mounting demand for such trading instruments.

 

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