# Expiration value (expiration price, expiration price calculation)

#### What does expiration value mean?

Nadex calculates the expiration value for all binary options, knock-outs, and spreads using a consistent, transparent process. All Nadex contracts that have the same underlying market and expiration time will end with the same expiration value. Why? They are derivatives of the same underlying market and that market can only have one price at a particular time.

Why is that important for you to know? Some binary options broker-dealers are not transparent. You simply have to take their word that they are giving you a fair outcome. As a CFTC-regulated, US-based financial exchange, Nadex plays by strict rules of transparency and fairness.

The settlement calculations for contracts based on futures and currencies are slightly different, as described below.

## Futures expiration value calculation

**Normal activity (fewer than 25 trades in the last 10 seconds):**

Take the last 25 trade prices in the underlying market.

Remove the highest and lowest five prices, leaving the middle 15.

Average the remaining 15 prices and round to one decimal point past the precision of the underlying market. (For the Wall Street 30 we round to the same precision as the underlying).

**High activity (25 or more trades in the last 10 seconds):**

Where 25 or more trades are collected in the last 10 seconds before expiration, take all trades collected during that time period.

Remove the highest and lowest 20% of trades. If 20% of the data set is a non-integer, round down to the nearest integer and remove that many prices.

Average the remaining trade prices and round to one decimal point past the precision of the underlying market (except for the Wall Street 30 which is rounded to the point of precision).

## Forex (currency) expiration value calculation

Unlike futures, which are traded on exchanges, currencies are traded on a delocalized global network. Therefore the expiration value calculation is different, but the goal is the same: to get an accurate picture of the market and determine the trade outcomes fairly.

Instead of a trade price, Nadex uses a midpoint price - the price midway between the best bid and offer which are no more than 10 pips apart. Pips are the smallest price increment in forex, similar in usage to a tick in futures. The underlying market price data comes from a proprietary forex data feed based on data from major banks. Backup data may be obtained through Bloomberg or another trusted data provider.

Nadex calculates the expiration values for spot FX with different calculations under normal conditions and for highly active markets.

**Normal activity (fewer than 10 midpoint prices in the last 10 seconds)**

Take the last 10 midpoints (10 pips wide or less) in the underlying market, before expiration.

Remove the highest three prices and lowest three prices.

Average the remaining four prices and round to one decimal point past the precision of the underlying market.

**High activity (10 or more midpoint prices in the last 10 seconds)**

Take all midpoints collected (10 pips wide or less) in the last 10 seconds.

Remove the highest and lowest 30% of prices. If 30% of the data set is a non-integer, round down to the nearest integer and remove that many prices.

Average the remaining prices and round to one decimal point past the precision of the underlying market.

## Economic event expiration value calculation

The expiration value for an economic report contract is the figure released by the designated reporting body. For example, the weekly jobless claims number is reported by the US Bureau of Labor Statistics, and GDP is reported by the Department of Commerce.

## Spreads and knock-outs

Since binary options are all or nothing, if the option moves in-the-money—above the strike price—by even the minimum amount, you still receive the full $100 payout. For spreads and knock-outs, by contrast, a small increase or decrease in price just before expiration will have a relatively small impact on your final payout.

Please reference the Nadex Rulebook for the most up-to-date and detailed information regarding settlement calculations and expiration values.