Volatility & advanced strategies
What are Binary Options and what makes them fundamentally distinct from standard exchange-listed derivatives?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
Binary options pay a fixed all-or-nothing amount based on whether an underlying is above or below a strike at expiration, unlike standard options whose payoff scales continuously with intrinsic value.
How it works
Exchange-listed binaries like Nadex contracts are CFTC-regulated, cash-settled, and trade with prices between $0-$100 reflecting probability, distinct from unregulated offshore binary platforms the SEC has repeatedly warned about.
An example
A Nadex binary on 'S&P 500 above 4500 at 2pm' settles at $100 if true or $0 if false, regardless of how far above or below the index closed.
Risk & limitations
SEC and CFTC have issued investor alerts citing widespread fraud on unregistered binary options websites; trade only CFTC-regulated exchanges like Nadex or Cboe.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.