Binary Option example
The latest U.S. manufacturing figures are due today, and you expect poor data to immediately weaken the dollar against the yen.
In this example, spot USD/JPY is trading around $78.075. You opt for a Binary Option as you expect volatility but want to limit your potential risk.
You believe the dollar will depreciate, in the wake of the anticipated disappointing data.
USD/JPY > 78.06 (2PM)
You opt to Sell as you think the rate will be below 78.06 at 2pm.
You select 12 contracts at the bid price of 56.00. Each contract is worth $1 per pip.
Your Maximum Profit and Loss are displayed automatically.
The most you can make is $672; the most you can lose is $528.*
Based on Nadex's calculated expiration value for the spot forex rate at 2pm, your Binary Option will settle at:
100 if this value is above 78.06
0 if this value is at or below 78.06
At 2pm, Nadex's calculated expiration value for USD/JPY is below 78.06.
Your trade settles at 0.
The difference between your opening price (56) and the settlement price (0) is 56.
Multiply 56 by the number of contracts (12) and the contract value per pip ($1) to calculate your gross profit.
56 x 12 x $1 = $672*
At 2pm, Nadex's calculated expiration value for USD/JPY is above 78.06.
Your trade settles at 100.
The difference between your opening price (56) and the settlement price (100) is 44.
Multiply 44 by the number of contracts (12) and the contract value per pip ($1) to calculate your gross loss.
44 x 12 x $1 = $528*
Trade the financial markets with strictly limited risk and low collateral.
An in-depth guide to placing your first Binary Option trade, from the first step to the last.