Opportunities in Flat Markets
With our unique binary contracts, you can benefit from volatility even when the underlying market is flat.
What Are Flat Markets?
Flat markets are low volatility markets that tend not to rise or fall significantly over a period of hours, days or even weeks.
Benefit From Flat Markets
Nadex Binary Options can exhibit volatility, even when the underlying market does not.
Our binary contracts ask a 'yes' or 'no' question. For example, the contract Nadex Gold > $1700 (1:30PM) asks whether the price of gold will be above $1700 at 1:30pm. If the final outcome is 'yes', the contract settles at 100. If it is 'no', it settles at 0.
As the binary contract nears expiration its price will move towards 100 or 0, even if the underlying market remains stable. On a day when the market does not move a single point, the value of a binary contract could fluctuate by 40% or more.
Example: EUR/USD Binary Option
Imagine the EUR/USD spot FX pair is trading at 1.2300 and you believe the market will remain flat for the rest of the day.
Point A: Nadex EUR/USD > 1.2320 (3PM) is trading at a bid/offer of 42/46. You sell at 42, thinking that EUR/USD will stay below 1.2320 and the price of the Binary Option will move towards 0.
Point B: The underlying market has remained flat. However, the contract is closer to expiration, so there is a lower probability that EUR/USD will exceed 1.2320 by 3pm. Consequently the price of the Binary Option drops to 18/22. At this point, you could exit the position at 22, for a gain of 20 points per contract (not inclusive of fees).
Point C: At expiration, the value of the EUR/USD is still below 1.2320. The statement EUR/USD > 1.2320 is false, the Binary Option settles at 0 and you gain 42 points per contract (not inclusive of fees).
In this scenario, even though the underlying EUR/USD spot market remained virtually unchanged, you were able to realize a gain by trading a Nadex binary contract.
On the other hand, if the value of EUR/USD was above 1.2320 at expiration, the Binary Option would settle at 100 and you would lose your initial deposit on this position.
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You can open an account with Nadex in less than five minutes. It’s free to open and there’s no obligation to trade.
When you are ready to start trading, you need to make a minimum initial deposit of at least $100. After your first deposit, there is no minimum deposit amount, but your account must have enough to cover the maximum potential loss you could incur on your open positions.
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