Nadex is the first exchange really designed in this way, designed exactly specifically for the retail trader. Its not designed for the institutions that have their high frequency computers that are trying to chuck 00:06:53 pennies out of a market. Its designed from a lot of aspects for that retail trader.Typically, that means a lower cost of entry. A lot of people want to have exposure to the markets, but oftentimes, it requires quite a bit of capital to get in and actually trade, whether it be from a margin perspective or just starting out your account. In some place its 25,000, 50,000. Its a lower cost of entry to Nadex.Also, all of our contracts as we were talking a little bit before this got going, a lot of our contracts are limited risk. Touch more on that on the binary option, but theyre fully collateralized. Rather than margin, traders are putting up the full amount of their risk. Similar to if youre buying a call, you put up your risk in that call. No matter what happens to the market, thats your risk. Our contracts are a little bit different than a traditional option and again, well explain that in a little bit.Were also the only exchange that accepts direct retail members so you dont have to be a Wall Street bank or a large top shop to come in and trade on Nadex. Thats one of the key concepts for me. We want to keep it a fair, even playing field. Whether youre a part-time broker in New York or like a couple of my friends, Ive got a friend out near my hometown of 1,200 where I grew up as a truck driver and he started taking a look at Nadex as well, people of all walks of life. One of the reason is the reasons are what I just mentioned. Anybody can participate. Its really built on that belief that everybody should be afforded that opportunity, not just the large banks, but they should do that in a fair, even playing field. Thats just a little bit about Nadex.Lets get into the meat here a little bit and again, Travis, if you do have any questions or you want me to pause at any point, just let me know. Im going to start going through the slides here. With the agenda, well just do an overview to binary options. This will not make you an expert by any means, but they are fairly simple contracts. Were going to look at a strategy. Well probably take some questions after the binary options, and then get into the strategy just to give you an illustration of how people use that in the market and of course, well have plenty of time throughout for questions.Before I get started, one thing I do want to mention here, obviously a risk disclosure, futures, swaps, options, pretty much any market that youre putting money into involves risk. Im a huge fan of Nadex as hopefully will become very apparent, but theres also no exchange in the world that just prints 100 bills. Youre not guaranteed anything in life. We have to take responsibility for our trade.One thing I will mention in here, this is going to be educational so Im going to run through an example here, dont just go out and say, Hey, Dan said this. Im going to go trade it. One thing you will notice thats not in the Nadex disclaimer thats in a lot of others, you may see is that you can lose more money thats in your account. That cant happen with Nadex and well take a look at that when we do the risk-reward on binary options.Lets just get right into it. A binary option, and I kind of consider these options for non-options traders. I am by no means an options expert. Im pretty efficient with them, but Im by no means an expert. You could spend a lifetime learning options, and I think thats one of the things that are so important for what, Travis, you guys are doing at OptionsANIMAL is just helping clear away a lot of misconceptions and kind of unveiling that whole market. I love options. I think theyre a great tool.With binary options, I think they also make a great alternative tool. They are similar in a lot of ways to a traditional option, but well discuss how theyre different. Again, these are binary options. Theyre options for non-options traders. If youre an options trader though, please dont feel left out. You can trade them just as well, but they are short-term contracts. By their very nature, they have to be short-term and well take a look at price and time and how that looks.All the contracts are limited risks. If you are an options trader, you could think of them rather than buying a put or call more like a single-leg options spread. Its a statement. Its made up of three components. Theres an underlying market. With Nadex, you can trade on global equity index futures. You can trade on commodities, oil, gold, nati 00:11:09 gas, copper, silver. You can trade on currencies. Theres a quite a few underlying markets.In this example, maybe we say EURO/USD greater than 1.30 just to throw out a price or oil greater than 90 or 95. You have an underlying market and then you have your strike price. Theres also an expiration time. This is an option. Theres an expiration time. Its a contract bound by time.Lets just use an example here. We might say okay, oil, crude oils is the underlying market greater than 95 at 3 oclock this afternoon, just as an example. Whether youre buying or selling that contract, whether you think that condition is true or false because thats basically all these are, are true or false statements, yes or no, whether youre buying or selling, both your risk and reward are capped. It has a range of 0 and a floor 00:12:05 to 100.If youre thinking of it as a true or false statement, if the underlying market in this example oil is greater than 95 and oil at expiration is trading at 94, well, then thats not true. It settles as zero. If its trading at lets say 95.50, its a true statement, it settles at 100. Im sorry. I think I just inaudible 00:12:27. If its trading at 94.50, its false, so its trading at zero. If its false, its zero, true, 100 at expiration.Sometimes youll hear these referred to as all or nothing options. Thats true at expiration. At expiration, theyre either going to be 0 or 100, all or nothing in that case.
