# Settlement Value definition

Binary Options

At expiration, a binary option will have a settlement value of either \$0 or \$100. It’s \$100 if the indicative price is above the strike price of the binary. It is zero if the indicative price is at or below the strike price.

The indicative price of the underlying market at the moment of expiration is also called the Nadex Expiration Value or Settlement Value, since that value will determine whether the binary option pays out \$100 or not. At settlement, the payout is all or nothing, which is why they are called “binary.”

The description of the outcome is based on the buyer’s point of view.

The buyer of the binary option contract will receive \$100/contract when the settlement value is 100, meaning the indicative market price is above the strike price.

For the seller, the reverse happens. Since the buyer and seller together put up the original \$100 value of the binary option, when the buyer gets \$100, the seller gets zero, and vice-versa.

Thus, the seller of the binary option contract will receive \$100/contract when the settlement value is 0 and receives nothing when the settlement is 100.

Again, if the settlement value is 100, the buyer gets the \$100 payout. If it’s zero, the seller gets the \$100 payout.

Unlike the all or nothing settlement value of binary options, the settlement value for Nadex call spreads is variable and divided between the buyer and seller.

The settlement is calculated by comparing the indicative price at expiration with the upper and lower strike prices of the call spread.

For example, if a call spread contract with strikes 156.30 -158.80 settled at an expiration value of 156.422 the buyer and seller would receive payout amounts as follows: