Introduction to Binary Options and NADEX

Written by OptionsANIMAL on . Posted in Webinars

Video Transcription

Travis: All right, good morning everyone or good afternoon to some, especially there in the East Coast. Here in the West Coast, it’s still morning here, but want to welcome everyone to another one of our educational webcasts here with OptionsANIMAL.

I know we’ve got quite a few still trying to make their way into the room. It looks like it’s going to be an absolute full house today so I do want to give folks adequate amount of time to get in and get settled. I know some are trying to step away for lunch or what not, and get signed in here.

I’m especially excited about the webinar we have today. Here at OptionsANIMAL, and I want to preface this starting out first welcoming our current students in the program here with us today. It’s always exciting to have you take time out of your day to be with us and explore some new areas of the market, but especially for those folks who maybe aren’t a part of the community, at least not yet or have maybe been on a couple of our webinars before. We like to do these special webinars here a couple times a month. We do two to three a month. Sometimes it’s myself. Sometimes it’s Greg Jensen. Sometimes it’s Guy Adami from Fast Money hosting the webinars.

What I’d like to do is I’m a big believer in broadening perspective and not to throw out clichés and everything you hear thrown around in today’s market, certainly in the past four years of how putting your eggs all in one basket and needing to diversify. I am a big believer in having a comprehensive full viewpoint of today’s markets as markets in general are rapidly expanding.

There’s so much opportunity out there. It’s not simply just opportunity in trading stocks or maybe it’s not just trading equity options or futures, but there are other opportunities out there like binary options, which we’re going to discuss today that may open up a section of your portfolio to something new, something you haven’t explored before, something to where you could find some yield or could find some potential profit out there that you’re not currently looking at. We like to open your eyes and your viewpoint to different sections of the market with these special webinars.

Like I said, I’m very excited today. I’ve got a good friend of mine, Dan Cook who runs business development for Nadex. I don’t know if you folks have heard of Nadex. Maybe some of you had. You’ve probably seen their commercials from time to time on CNBC. Perhaps you’ve seen some of their advertisements, whether it’s in magazines, so on and so forth, but Nadex is a derivatives exchange that specializes in binary options. The name, North American Derivatives Exchange, obviously Nadex, play on that.

What I wanted to do is I wanted to bring Dan in today to shed a little bit of light on the mystery that surrounds binary options. I know there’s a lot of interest out there. In fact, binary options, if you look at Google searched terms, it’s one of the most searched terms out there. With that said, I think there’s a lot of … how do I put it? I think there’s a lot of myths that surround the term binary options with that mystery. I think there’s a lot of stuff out there that you find on the web that isn’t necessarily true.

I wanted to bring Dan in today to talk a little bit about binary, to shed some light on it and to give us a good foundation that we can build upon, especially our students here at OptionsANIMAL and again, some of you folks who aren’t with OptionsANIMAL, just provide you with that base foundation because again, what we do here at OptionsANIMAL, we are an online options education firm. We specialize in trading the stock market and obviously, equity options, but again our firm, we focus on a wide range approach to the markets, and binary options is something that we’re going to start to build out and build upon here within our own community.

Dan, I want to go ahead and pass it over to you. I know you’ve got a nice presentation here and you’re going to walk us down this road. I’ll interject here and there with some questions, but why don’t you go ahead and get us started, a little bit about yourself and then an introduction to Nadex, and let’s get into some of the meat here about what binary options are.

Dan: That sounds great. Thank you for the introduction, Travis. It’s great to be here. One of the things that you said that stuck out are the myths aspect of binary options. Google searched terms on binaries have just been going through the roof. If you look at Google trends from 2011 to present, it’s just on parabolic. Now unfortunately, like with any I guess newer type of contract, and binaries have been around a while. I started trading them in 2008, was the first time I placed a trade. That was before I came to Nadex. I’ve been with Nadex a couple of years, but there are a lot of myths. There are a lot of websites out there that’ll make big promises. What we’re going to be talking about today are an exchange-traded contract. We’ll get a little bit more into … a little bit about Nadex before we get into the binary options.

There are a lot of myths out there. Kind of a general rule of thumb, any time you see a website that promises X amount of return or you can take $100 and make it a million, just run away and that’s the same with binary options as any market. Hopefully, what we’ll do today is dispel a little bit of the myths. There are a lot of offshore brokers that offer what they call binary options substantially different than what’s offered at Nadex.

With Nadex, as you mentioned we are the North American Derivatives Exchange. We’re based in Chicago. We are CFGC registered and that’s a big part to how we have to conduct ourself. Because we are registered with the CFGC, they are a regulatory body, we obviously have rules, requirements, reporting requirements. We have to act as an exchange.

As an exchange, we’re not taking the other side of the trade. We’re simply here to match buyers and sellers. That’s a key concept. With Nadex, we’re not making markets. There are market makers that make markets like on any other exchange. Every member of Nadex technically is a market maker.

What really makes us different and one of the things … obviously, I’m biased now because I work for Nadex and I like getting a paycheck every couple weeks, but before I ever came to Nadex, I was talking a lot about their contracts because they really appealed to me and just how they’re structured. Nadex is the first exchange really designed in this way, designed exactly specifically for the retail trader. It’s not designed for the institutions that have their high frequency computers that are trying to [chuck 00:06:53] pennies out of a market. It’s designed from a lot of aspects for that retail trader.

Typically, that means a lower cost of entry. A lot of people want to have exposure to the markets, but oftentimes, it requires quite a bit of capital to get in and actually trade, whether it be from a margin perspective or just starting out your account. In some place it’s $25,000, $50,000. It’s a lower cost of entry to Nadex.

Also, all of our contracts as we were talking a little bit before this got going, a lot of our contracts are limited risk. Touch more on that on the binary option, but they’re fully collateralized. Rather than margin, traders are putting up the full amount of their risk. Similar to if you’re buying a call, you put up your risk in that call. No matter what happens to the market, that’s your risk. Our contracts are a little bit different than a traditional option and again, we’ll explain that in a little bit.

We’re also the only exchange that accepts direct retail members so you don’t have to be a Wall Street bank or a large top shop to come in and trade on Nadex. That’s one of the key concepts for me. We want to keep it a fair, even playing field. Whether you’re a part-time broker in New York or like a couple of my friends, I’ve got a friend out near my hometown of 1,200 where I grew up as a truck driver and he started taking a look at Nadex as well, people of all walks of life. One of the reason is the reasons are what I just mentioned. Anybody can participate. It’s really built on that belief that everybody should be afforded that opportunity, not just the large banks, but they should do that in a fair, even playing field. That’s just a little bit about Nadex.

Let’s get into the meat here a little bit and again, Travis, if you do have any questions or you want me to pause at any point, just let me know. I’m going to start going through the slides here. With the agenda, we’ll just do an overview to binary options. This will not make you an expert by any means, but they are fairly simple contracts. We’re going to look at a strategy. We’ll probably take some questions after the binary options, and then get into the strategy just to give you an illustration of how people use that in the market and of course, we’ll have plenty of time throughout for questions.

Before I get started, one thing I do want to mention here, obviously a risk disclosure, futures, swaps, options, pretty much any market that you’re putting money into involves risk. I’m a huge fan of Nadex as hopefully will become very apparent, but there’s also no exchange in the world that just prints $100 bills. You’re not guaranteed anything in life. We have to take responsibility for our trade.

One thing I will mention in here, this is going to be educational so I’m going to run through an example here, don’t just go out and say, “Hey, Dan said this. I’m going to go trade it.” One thing you will notice that’s not in the Nadex disclaimer that’s in a lot of others, you may see is that you can lose more money that’s in your account. That can’t happen with Nadex and we’ll take a look at that when we do the risk-reward on binary options.

Let’s just get right into it. A binary option, and I kind of consider these options for non-options traders. I am by no means an options expert. I’m pretty efficient with them, but I’m by no means an expert. You could spend a lifetime learning options, and I think that’s one of the things that are so important for what, Travis, you guys are doing at OptionsANIMAL is just helping clear away a lot of misconceptions and kind of unveiling that whole market. I love options. I think they’re a great tool.

With binary options, I think they also make a great alternative tool. They are similar in a lot of ways to a traditional option, but we’ll discuss how they’re different. Again, these are binary options. They’re options for non-options traders. If you’re an options trader though, please don’t feel left out. You can trade them just as well, but they are short-term contracts. By their very nature, they have to be short-term and we’ll take a look at price and time and how that looks.

All the contracts are limited risks. If you are an options trader, you could think of them rather than buying a put or call more like a single-leg options spread. It’s a statement. It’s made up of three components. There’s an underlying market. With Nadex, you can trade on global equity index futures. You can trade on commodities, oil, gold, [nati 00:11:09] gas, copper, silver. You can trade on currencies. There’s a quite a few underlying markets.

In this example, maybe we say EURO/USD greater than 1.30 just to throw out a price or oil greater than 90 or 95. You have an underlying market and then you have your strike price. There’s also an expiration time. This is an option. There’s an expiration time. It’s a contract bound by time.

Let’s just use an example here. We might say okay, oil, crude oils is the underlying market greater than 95 at 3 o’clock this afternoon, just as an example. Whether you’re buying or selling that contract, whether you think that condition is true or false because that’s basically all these are, are true or false statements, yes or no, whether you’re buying or selling, both your risk and reward are capped. It has a range of 0 [and a floor 00:12:05] to 100.

If you’re thinking of it as a true or false statement, if the underlying market in this example oil is greater than 95 and oil at expiration is trading at 94, well, then that’s not true. It settles as zero. If it’s trading at let’s say 95.50, it’s a true statement, it settles at 100. I’m sorry. I think I just [inaudible 00:12:27]. If it’s trading at 94.50, it’s false, so it’s trading at zero. If it’s false, it’s zero, true, 100 at expiration.

Sometimes you’ll hear these referred to as all or nothing options. That’s true at expiration. At expiration, they’re either going to be 0 or 100, all or nothing in that case. From a trading perspective though, I don’t like that term. With Nadex, and this is a big differentiator on the binary options that we offer is that you can trade in and out of these contracts. I’ll go more into that as we get into the examples. Just think of it as a true or false event. If it’s true, if oil is greater, the 95 at X time in the future, the options settles at 100. If it’s false, it settles at zero.

If you think about the price of a binary option, and a lot of options traders will spend years studying Black-Scholes, to figure out all of the Greeks, to look at their own … what they think the market’s going to do to basically discern a probability in the market. The price of a binary option itself, it ranges from 0%, false, to 100% true. When you look at the binary option of this trading, you could think of that price as a probability.

Time and volatility are factored into the price. If you do know Black-Schole’s great, you might be able to find a way … basically binary options pricing model is just kind of an offshoot of that, very similar factors. Time and volatility are factored in and we’ll take a look at that.

You don’t have to wait for expiration. I’m going to say that again. You don’t have to wait for expiration to close a position on a binary option. Now you might be thinking well, this is really confusing. You’ve already lost me. When we get into the charts, I don’t know about anybody else, I’m a technician by trade, when we get into the charts, I think it’ll make a lot more sense.

Here’s a binary option order ticket. This is [often 00:14:18] Nadex platform and I will … before we wrap up today, I’ll show you where you can get a demo account, try these things out, absolutely no risk, but basically we have our condition. Now in this case, the US500, the underlying markets for this is the ES, the S&P E-mini, in this case, it was the September contract. The condition was greater than 1377, so hopefully, everybody can see that circle in red up there. Actually, let me get my spotlight out here. Up here, we have our US 500, September is the underlying contract month, greater than 1377. In this case, it was expiring at 4:15 P.M. on the 19th of July. You see that right on the order ticket.

We have a bid and offer just like any other market. Now with Nadex, and another big differentiator from binary options you might have seen before, you can basically make your own market. You don’t just have to take the bid-offer. You don’t have to buy at 26, sell at 22.50 in this case. If you want to try to buy at a better price, you could stick an order in for 25. This is an exchange. Nadex is absolutely 100% unbiased in this. If there’s a market and somebody’ll take you up on that price, you get filled. You could say instead of saying I’m going to buy at 26. I’m going to try to get it for 25. You could put that order in there. You can buy or sell these contracts. Whether you’re buying or selling, risk is always limited.

If I put in one contract, every binary option contract is worth $100. If I’m buying this contract, again, this isn’t a margin. It’s fully collateralized. If I’m a buyer at 26, my worst case scenario … basically, if I’m saying I’m going to buy at 26, I’m expecting either A, the market to move toward my strike price and maybe it goes higher, maybe the price of the binary goes up to 50 where I could set a limit to take profit at 50, or I can wait to see if it expires at 100. Basically, if I’m buying at 26, I say that statement is true or it’s going to move a lot closer to true than it is now.

If I put up my money at 26, I have a maximum profit of $74. Again, it’s always got to equal 100 per contract. My maximum loss is $26. When I place this trade, I put up $26, it’s in, I’m fully collateralized. My worst-case scenario if … it doesn’t matter if World War III breaks out, this contract can’t go below zero. I can’t lose more than my $26. If I’m doing it in multiples, if I’m trading 10 contracts, I’m putting up $260. It’s kind of a very simple concept and before you ever click the place order button, you know upfront what your maximum profit is, what your maximum loss is.

Again, it’s a range of 0 to 100, $100 per contract. If I’m a buyer, my risk and the collateral I put up is the difference between the buy price and zero. if I’m a seller, the collateral I put up is the difference between where I’m selling and 100 because if I’m a seller, I think it’s going to go toward zero. My worst-case scenario is 100. My maximum reward is always exactly whatever’s left out of that 100. If I’m a buyer at 90, my maximum reward is 10. If I’m a seller and I’m selling at 70, my best-case scenario is 0. I could make 70 points.

This is just a quick overview of the order ticket we just looked at because there’s two sides [of each order 00:17:52], right, there’s buyers and sellers. If there’s just a buyer and nobody there to take the other side, well you don’t get filled. Basically, what happens here is if I’m a buyer at 26, if you look at the left-hand side, basically 0 to 100, that red represents my worst-case scenario. I’m putting up 26 with the potential to make the green, which is 74.

On the opposite side, the seller is putting up the 74 with the potential to make 26. Your question might be well, that doesn’t make a lot of sense. Why would anybody do that? Your risk-reward is so far off. Because we’re looking at probabilities is the biggest answer. Right now if I look at this particular ticket, I might say that there’s about a … if I just take the split between the mid-price and I should be one that’s easier for math on me, but about what, 23.75, 24% let’s just say chance of that happening.

Now if I’m the buyer here, I might say well, there’s actually a 30% chance of that happening or I’m expecting a big move, I’m willing to take that for low risk. On the seller side, I might be looking at it and saying the probabilities are in my favor. I think there’s only a 15% chance that this event is going to happen. I’m more than willing to take the edge and sell this at 26 because if I do that over and over again, it’s never just one trade. It’s always a series of hundreds or thousands of trades, they might be willing to take on that edge because of their belief in the market.

Again, think of it as a probability. When you’re looking at these prices, all you’re doing is looking for the market to shift. One thing with the binaries, well, it doesn’t necessarily move like a traditional option will typically move not one for one. We have this thing called delta where it doesn’t move one for one with the market, but it moves in a lot of more linearity than we might see with a binary option. Both time to expiration and volatility can impact that price.

Let’s just take a look at a couple of charts here. I’ve got a condition here. EURO/USD if you look at the top greater than 1.4500 at 3 PM. That green line, hopefully everybody can see that, represents the 1.4500 strike price. This could be a two-hour option. This could be a daily option. This could be a weeklong option.

Now binary options as we’ll look at in a second have to be short by their very nature because we’re looking at a probability. If I was looking at EURO/USD greater than 1.4500 and let’s say, it was trading right at that strike price. It’s trading right at 1.45, or I’ve got the E-mini trading right at the strike price. If I’m trying to price that out and do that because the difference between one tick, and we’ll look at that in a second, 0 or 100 could be one tick, it’s very difficult to do. If I wanted to price that out 90 days, who the heck knows really where it’s going to be in 90 days? If it’s too far out, you lose opportunity because your bid-offer just really widens. By nature, these are very short-term up to a week.

What you see represented on the screen where the circle is, well, that circle is just the price I’m tracking in relationship to the underlying market, that green line and then the bid-offer price. Early in the life of this contract, if it’s trading around the strike price, there’s a general rule of thumb, it’s got to be trading around a mid-price of 50. It just has to. There’s a lot of time left, basically because the market can go up or down. It’s a 50-50 shot. It’s the probability that you look at.

Here we can see that it’s slightly over the strike price, 54-58, so we say okay, 56% chance of that happening. The market drops back down. Now because it’s lower than the strike price, we’re looking at 1.4500, what’s the probability of it being greater than 1.4500? It’s less than it was previously. It’s now below that. Another rule of thumb on binaries, if it’s below the strike price, the probability is going to be less of that event happening whereas opposed to it being over, the probability is greater. Not overly complicated stuff, but it is something to kind of get used to when you’re looking at a binary option.

We see it move along here. Now we’re at 34-38. Price really isn’t that much moved from the 42-46 where we had about a 44% chance. Now we’ve got about a 36% chance. Price isn’t different, but why the price of the binary has dropped is because of the time factor. We’ve seen a time erosion. There’s less time for this event to happen, for price to get back over the strike price for our condition to be true and sell at 100. We see that priced in. Now you might say this is out of the money, but remember this is a double-sided option. This 34-38 is out of the money for buyers, it’s in the money for sellers because if this market remained right there and stayed flat, that 34-38 is going to go to zero. If it never gets above the strike price, it’ll erode until it hits zero.

We see the market move back up. Now again, it’s over the strike price. Now we’re saying about a 74. I’ve got a 72-76 bid-offer. If I had bought down here at 38, if I was a buyer at 38, I could’ve set a limit here. If it gets back to the strike price, I could close at 50. If I set a limit let’s say at 68 and now we’re trading at 72-76, well, my 68 had to get filled in order for the price to move through it. The price can’t move through my order if I basically become the first one there. Basically, I can’t trade at 72-76 if I had a limit down here at 68. We’re seeing the probability in how price fluctuates around.

Price drops back down, now we see it a 22-26. Again, it’s actually closer to the strike and then finally, if it expires over, it expires at 100. It’s going to be a 100 or it’s going to be zero.

This is another chart, and one of the things that I want to illustrate on this one, this is a tick chart. This is about 15 minutes in timeframe and this will explain what we see really with short-term nature on the binary options and why it creates more opportunity. We have to remember that the statement, in this case it was the EURO/USD greater than 1.4500 and we’ve got that on the screen there, that green line, the difference between 0 and 100 could be 0.01 tick and so we see a lot of volatility. What we call it around here is exponential delta or it’s a traditional option, you have negative 1 to 1. On a binary option, you can have exponential delta because the movement of the underlying [is also exploding gamma 00:24:40] might be a better way to say it. The difference between 0.01 tick can be the difference between settling at 0 or 100. What we see is it approaches expiration and it’s trading around that strike price, you can see really aggressive moves in the market.

I’ll give you an illustration here. This is just about 15 minutes in time just to give you a perspective. This is a … I’m sorry. This wasn’t the EURO/USD. This is POUND/DOLLAR chart. The entire width of this chart is about 18 pips, very small. It’s an extremely small movement for the currency market. What we see here, where in the previous example, we kind of saw maybe a little bit slower moving. Here we see we have a binary option of 32-36. It’s below the strike price.

A minute and a half later, it’s over the strike price, 68-72. Two minutes later, it’s at 20-24. About maybe 30 seconds later, maybe 45 second later from 20-24, it’s at 48-52. See how the underlying market really hasn’t moved that much. It’s actually moved in a range of about 5 pips, could be 5 ticks depending on the instrument you’re trading. It’s only moved about 5 pips or 5 ticks, but we’ve seen the binary already move very rapidly, move from 68-72 down to 20-24 in a couple of minutes up to 48-52. I can trade any of these prices.

Obviously, it moves back down, now it’s 19-23. Two minutes later, it’s now moved almost at pretty well above the strike price, but pretty well is relative. That’s only about 8 pips above. We’ve seen a change in the price of that binary option.

I’m going to use this as both a tale of opportunity and one of caution. A lot of times, when people get into binary options, they’ll say you know what, I’m going to buy at 90 all the time because there’s a 90% probability that this is going to happen. I think I have a bit of a market edge and there’s a strategy that can be done with that. Nothing wrong with it, but you want to be very cautious. When you’re doing it, are you doing it right near expiration where you’re 90% probability is really just the difference between the market moving 1 tick? Probably not. It can evaporate pretty quick, 1 or 2 ticks.

Where it creates the opportunity … nobody wants to get in at 90 and then all of a sudden have it go to zero because it can happen rapidly as we’ll see in a second. Where the opportunity can come in where we see a lot of people trade this particularly because these times are so volatile is if we got in, let’s say we got in somewhere around this 1923. Let’s say we were just a buyer at 25. We’re a buyer at 25. It shoots up like this. We’re really happy. Well, that’s fine, but as rapidly as this is moving, we probably can’t get in [an extra $2 00:27:26] order if we’re doing it manually. If you’re trading around expiration, you could put something in here 25. If you trade 10 contracts, why not set a limit order at 50, a limit order at 75 for another partial, and then see if the rest go to a 100. That way because the market can’t trade through your limit, you’ve got a lot better chance of getting filled if the market hits those levels than you do if you’re just sitting here trying to click away.

Market moves back down, goes 84-88. From the time it was at 94-99 bid-offer, about 4-1/2 minutes later, it’s at zero. It can move very rapidly. There’s both an opportunity there as well as a word of caution I guess is the way to say that.

With strike prices, and here’s another big differentiator on Nadex, there’s multiple strike prices for each market. Think of it as an options chain and we’ll look at that in a second. For each underlying market, there’s multiple timeframes depending on your type of trader. There’s also multiple strike prices. One of the things to do, and we’ll look at a chart in just a moment, we’ll talk a little bit more about how you can do technicals on these because a lot of people might say well, these are such short-term. I can’t really do any technical.

That’s not true at all. Actually, what you want to do is do the technicals on the underlying market. That’s one I want to stress. Do all of your analysis on the charts of the underlying market because that’s what’s going to move the price of the binary. We’ll take a look at that when we pull up some charts in just a moment here. If there is extreme volatility, we actually add more strikes. Our job as an exchange is to keep a tradable market where people can bid and offer around basically.

We can look at this here, and I’m going to bring up my spotlight real quick. This is the US500. This was on the same September contract. We can see a range of strike prices. Now again, if we think about these as probabilities, in this case, we have a range from 1118 all the way up to 1175. Sometimes, don’t you wish you could just go back in time and see these and go wow, why didn’t I trade this at that, and make our guesses then. Obviously, that’ll never happen. If anybody can figure out a way though, I’ll shoot you my email address right after this.

If we look at this one though at 1154, now this might look fairly confusing when you first look at it. Again, we’re going to show you how to get a demo account. 50-54, I know the underlying market is trading slightly above 1154. The reason being when I look at my options chain here, I’ve got a midpoint of about 52.75 so 53% of that probability. It’s slightly over 1154. It’s below 1157 because I’ve got a 39-43 bid-offer so about a 41% chance. As we move down, we can see the markets trading over these. Again, we know that right away because we have higher probability in these.

Let me flip my screen. Again, if you’re feeling a bit confused or overwhelmed, don’t worry. This is a lot of stuff to take in for the first time you’re seeing it. We’re going to point you to a bunch of resources. We’re going to have a lot with OptionsANIMAL here so just kind of give you a feel of how this works and how you might want to use technicals with these.

Technically, when you’re doing any type of technical analysis, at least any analysis that I’ve run into, and you can use these with fundamentals as well, news announcements or whatever, but on the technical side, typically what we’re doing is picking out levels of support and resistance, turning points for the market or potential breakout points for the market. We want to look at that on a reasonable timeframe whatever type of trader we are. We might even use multiple timeframes.

Basically, when we’re doing our technical analysis, and here we have a chart. The underlying price here is actually the underlying of the E-mini contract. All I’ve done here is taken that options chain and put it on my chart. If I’m looking right now at this price, and let’s say I expected it to go up. I don’t see anything technical on this chart, but it’s very short-term. Let’s say we expected it to go up. Maybe we’ve got something where we think we’ve got a breakout here and we want it to go up. We could be a buyer of any of these. What we’re going to have is a different risk-reward ratio when we’re buying.

For instance, maybe I saw some support just down here. I thought on the longer term, now that it’s broken through this level, I’ve got some support, I don’t think it’ll break back down below this level, and let me get my spotlight out here. I don’t think it’ll break back down below this level. Well, in that case, I might want to be a buyer at 65. I might want to see if I can return 35 because I think the probabilities are in my favor. Now I’m putting up 65 to make 35.

My risk-reward in that case from the outset looks like it’s a bit inverse from what we might want as traders, but always remember, risk-reward has nothing really to do with the set-up of the trade. It’s always after the fact. It’s okay, if I’ve been successful on this many trades, how much did I make? If I lost on this many, how much did I lose and what’s that ratio?

If I can always buy at 65 and I’m right five times out of six, I can make money. Now if I buy at 65 and I’m wrong three times out of six, it’s going to be tough to make money. You have to take those factors into consideration. If I thought I was really going to get a good breakout move and I might have some resistance up here around where you see the 20-23, maybe I’m a buyer of this 32.50 trying to get a little bit better risk-reward on the outset on that particular trade.

A lot of different things you can do, but basically if I’m a buyer, I think that A, either it’s going to finish above the strike price or it’s going to move enough. If I buy this one up here at 10, I think the market’s going to move up to where this 10 might move to a price of 30 or 40 or 50. If it’s going to get up here, remember, if it’s going to get up here, it’s got to trade somewhere around the 50 mark. Maybe I put in a sell order at 45, see if it hits that, risking very little to return a bit more.

Again, if I’m thinking of it as true or false or even moving more towards true, I’m a buyer. If I think it’s going to stay where it’s at … or excuse me, drop, I’m a seller. I think it’s going to go towards false. It’s all about moving one direction or the other. Moving towards true or moving towards false or if we wait ‘til expiration thinking it’s going to be true or false.

Again, I can sell any of these. If I’m a seller though at 350, really what’s my maximum outcome? I can make 350, that’s a whole lot of risk to take particularly in today’s markets whereas maybe I consider selling a little bit more if I’ve got the probability to my favor or maybe I see there’s some resistance up here, selling at 29. Again, it’s just the inverse of what we looked at on the buy side.

If I think the market’s just going to stay flat, I can be a buyer and a seller. I can choose different strike. I can also do that to off that risk even if I think it’s going to go up, I might want to take a little risk off the other side. If I think the market’s going to stay flat, I can trade multiple strikes if I think it’s going to be range bound.

One that we see used and one that is good, we’re expecting volatility to really float our price to really scream one way or the other, you could still take both sides of the market and you can be a buyer of the lower probabilities, a seller of the other. You could put limits on both sides, and this is actually a strategy that we’re going to run through.

This was a very high-level overview, but I’m happy to take some questions if anybody has any right now before we get into the next part, which is one of the strategies that we look at. Could be any time, but particularly around like fundamental news announcements, non-farm payroll, Fed decision, CPI, you name it, oil inventory reports.

Travis: Hey, Dan. This is Travis. There was one question that came up a few different times, and it was regarding the limit orders and implementation of limit orders on binary options. Could you expand on that a little bit?

Dan: Definitely, and I can actually give you a little bit of insight into what we’re going to be doing. This is actually the first time I’ve announced it publicly. I don’t have a set timeframe, but Nadex is actually all limit orders. When you get in, you’re getting in on a limit order, you’re getting out on a limit order. There’s no stops, and that’s one actually of the big benefits because you’re bound by 0 to 100. That’s how you should be managing your risk. You can always take off a position if you’re starting to lose on it, you can take it off early, but again, executing it through a limit order.

One of the reasons why, and I’ve been asked a lot about stops on binary options as well as market orders, one of the reasons why that would be really I think in my opinion and my humble opinion only, not actually, only quite a few once they realize when we looked at how that market was moving, you can have a binary that goes from 90 to 10 in a tick. The purpose of a stop order is to control your risk. If I’m buying at 90 and I put a stop at 70, but the next available market is 10, I’m going to get filled at 10. Now that’s going to upset a lot of people. They’re going to go wait, it didn’t fill, but the market didn’t tick between that.

It’s almost like if you think about anybody trading around March 2009 when the Fed came out with the first round of [quantitative easing 00:37:13], if you had a stop in the S&P at 3 points, you might’ve thought you were protected at 3 points. Figure what the S&P gapped that day when they announced at 15. What was it, [Chip 00:37:25], do you remember? I’ve got [Chip in here 00:37:26]. It was a big gap. The EURO/US dollar, I knew people that had 30 pip stops on, the market gapped 170. Now those are fairly … and then that’s where they got filled was 170 so their $300 risk per contract became 1,700.

Now that’s something that happens not nearly as frequently in the underlying markets where you see stops on a binary. There’s a strike that happens on every expiration just about. We won’t see stops or market orders. Similar with a market order, if I’m getting in to the market and I’m going to click, and it’s trading at 20 and I’m looking to buy and all of sudden it’s at 90, and that’s where I get filled because that’s basically I’m saying market give me what you can at that time, I get filled there. All of a sudden on the next tick, it’s down at zero, I’m not too happy with that. That’s the reason why all the orders are limit orders.

Now one thing that we’re going to be implementing … I actually just had a meeting on this yesterday, I have one of my colleagues, Chip, here with me, I don’t even know if I’ve shared it with him yet, but we’re going to be looking at doing basically parent and contingent orders on the limit side. What that’ll mean is if you’ve done your analysis, it’ll be an if-then statement. If this order gets hit, so let’s say I have an order to buy at 20, if that order gets hit, it pops in a working order to sell at 70 or 80 or whatever we set it at. There are going to be some new order types coming in, but currently right now, every order on the exchange is a limit order. Did that make sense? I hope.

Travis: Yes, yes, perfect.

Male: Awesome.

Dan: We’re actually going to take a look at limit orders on the next strategy slide. Again, if there are any questions, just stop me as I’m going through here, but we’re basically going to take this concept that we just looked at and we’re going to look at it direction neutral, meaning we don’t care which way it’s going. We just expect it to blow up one direction or the other.

It’s kind of interesting. I did a … non-farm gets a lot of press and I haven’t done this study in a while so don’t quote me as far as current data, but I did it for an entire year where non-farm payroll basically comes out. We see big moves. Let’s say we’re looking at the Dow. We might see market’s slammed 175 points up, 15 minutes later, it’s giving back 175, and now it’s 150 down.

The interesting thing is when I did the study on the non-farm, almost every time, it was very rare that it actually picked a direction and ran, but it was 11 out of 12 months, it settled within 20 points over the open after having a range, an average range of something like 200 points. This was a strategy that a lot of people started to implement around that, but it could be non-farm. It could be if you’re trading oil, oil inventory reports. Whatever you’re trading, there’s typically some type of report that’s going to come out, whether it be a Fed decision, you’re looking at currencies or gold, this is direction neutral. We’re just looking for movement in the underlying.

One of the really nice things about this, and I don’t hear so much from options traders, but anybody … I don’t know if there’s anybody also along with their options trading futures as well as currencies, people that tried to go take both sides of the market, the underlying typically just get whipsawed out, and they don’t necessarily know their full risk if there’s a big market event where there’s a gap.

With binary options, you know your full risk upfront. There was a movie called Ronan. I don’t know if anybody’s ever seen that with Robert de Nero several years ago. He basically walks into this restaurant. He’s an ex-CIA agent and they have this meeting. Then he walks out with them out the back door, he reaches behind a box and pulls out a gun. They look at him like oh, geez, what’s this? He made the comment, “I never walk into a room I don’t know how to walk out of.”

I think that’s exactly the same thing with trading. I don’t want to walk into a trade that A, I don’t have a plan to get out of and B, I don’t know my worst case scenario because worst case scenarios (laughs) can be pretty bad. We might not even consider what they are until they happen to us. I look at the same with trading, and that’s one thing with this strategy or binary options at all, I know my worst-case scenario. It doesn’t matter if World War III breaks out. It doesn’t matter if all of a sudden the US discovers 200 trillion barrels of oil underneath basically any part of the United States. It doesn’t matter. My worst-case scenario is knowing upfront before I place or hit place that trade.

Like any type of trading, binary options I think are great, but we don’t want to get [grady 00:41:58], excuse me, greedy. We probably don’t probably want to get grady either if that is even a word, but we definitely don’t want to get greedy. You want to set reasonable limits and have a strategy for any type of trading that we’re doing. This one you can set it and walk away. If you prefer, some people like to actively trade it. Personally, I’m one, I don’t necessarily watch tick by tick.

Then just as a disclaimer, no one at Nadex by the way is allowed to trade these contracts including myself. Prior to Nadex, I was allowed. Now, I’m no longer, the reason being we’re an exchange. We have to be absolutely 100% unbiased as to the outcome of the contract. If I was sitting here trading as an employee of the exchange, that would look pretty bad, and we actually can’t trade the underlying markets either for that same reason. I use this example and often times I say I or this is what we could do. Just want everybody to know that Nadex is never taking the other side of your trade. We’re not even allowed to be in the same markets, underlying or Nadex that you’re trading.

Here we have, this is the ES contract, and this was one that was actually sent to me. I took away all the other strikes just to leave it a little bit less confusing here, but basically what we have, we’ve got the ES is trading right around 1230 on this particular day. I can’t remember. I think it was a GDP report that was coming out when it was sent to me, but it really doesn’t matter the report or even if there’s a report at all. It’s just you’re looking for activity in the market.

This is also the way some people I find trade breakouts or longer term technical patterns. If anybody’s trading technicals on a longer term, I often would look at daily patterns, but wouldn’t trade them because my risk would be too great in the underlying, but oftentimes they get a big move. If it breaks through on a daily pattern or if it bounces off, we typically get a big move as opposed to the shorter timeframes. It’s all, of course, relative.

Here we’ve got it trading around 1230. We have a 1210 strike and a 1250 strike. Basically, we’re looking at the 20 points either side of the market. In this particular case, again, we’re looking for the market to move. This particular person sold at 87, and we’ll draw these up in a second, bought at 13. That’s what they were looking to do. Basically, per contract, if I’m a seller at 87, I’m putting up $13 per contract because my worst-case scenario is 100. If the market stays up here right where it’s at, if the market just stayed flat throughout, this is going to settle at 100.

On the other side, he was a buyer at 13, putting up $13 on that side, worst case scenario being a buyer is zero, put up $13 per contract on this side. Again, if the market though just stays flat, if nothing happens on it, this 13 when it expires, if it’s not over the strike will settle at a zero. This is kind of how it’s set up and this was sent to me. This wasn’t one of my own.

There was a sell of greater than 1216 at 87. I had my strikes there. Sometimes my charts get a little bit goofed up. Sell at greater than 1216 at 87. Total risk, $130, 10 contracts times 13. This doesn’t include exchange fees, which are 0.90 cents per contract capped at 10 per order ticket so $9 whether he’s trading 10 contracts or 100 contracts on an order ticket, per ticket, $9 capped.

Set the limit to buy at 60 so sold at 87, set for a partial position at seven contracts. Set it at 60, again, didn’t want to get greedy, was just looking for a decent move in the market, bought 10 at 13, the 1255 strike, total risk 130, limit sell at 40, again, just looking for that movement.

We’re going to run through a few different outcomes. I have the actual outcome, but we’re going to run through a few because I want people to see all sides of it because I’m much more a big proponent of talking about the dark side of what can happen in a trade and understanding risk as really the primary way to be successful in the market. Have to have a trading plan. We’re going to run through all the scenarios that could happen on this. Well, not all of them, but the basis of a few different ones that could happen.

Basically, if the market comes out and makes this move, it’s now moved down. What’s happened to price? What was trading at 87-90 is now trading at 47-51. Because it’s trading down here, those seven were filled on this side. The one now that we were trading that was bought at 13, now basically, you can’t get out of. There’s no bids there. You can’t … it’s zero. You might as well let it run and see what happens.

Market shoots back up. Now again, there’s no stops here. You had a very low risk entry without a stop and so just because this other side got filled, didn’t mean this other one at the top wasn’t still active. Now there’s one at 87 and this is also another good case to set limit orders. Now this one at 87 is trading at 95-99. If there weren’t limit orders there on the fill, we’d still be in that trade, but would [now 00:47:17] have a loser and what would’ve been a potential profitable trade would be showing a loss.

Now the other side got filled. It’s possible for both sides to get filled. Now that 13 and we set the limit at 40, likely got filled and now it’s trading around 47. We have three remaining contracts on each side. We could close those out. If the market does this, here’s where they settle. This settles at 100. This side settles at 100. All of these conditions were true. They all settle at 100.

Here’s what happened on that. The 10 that were sold, the 12-16 at 87, seven hit a limit at 60 for 189. Three contracts settled at 100 for a loss of $39 each, again $13 per contract. If we wouldn’t have had that limit order in there, the loss would’ve been 390 on this side.

The tender were bought at 13, [set at 00:48:21] limit at 189. The other three that were left to go settled at 261. In this, the net return was 600, 639 on the profitable side, 39 on the losses, net 600, not including exchange fees.

Let’s look at another alternative though. Let’s say that the market had hit both of our limits and then just gone flat and settled actually in between our two strike prices and they’re not quite as good of an outcome, but still a pretty good one. I think a lot of us would take this on any day. We still have to fill on both limits, but now on the remaining three, we lost 39 on each side so 378 versus 78 in losses for net of 300.

Now let’s look at a worst-case scenario because I’m a big believer in always knowing the worst-case scenario, if you couldn’t tell already by now because I keep talking about it. If nothing would’ve happened, if the market just stayed flat, both sides would’ve lost for us. We’d have lost $260. That’s the worst-case scenario.

Something else I want to mention though because we can close out early, if you’re doing a strategy like this let’s say around a non-farm payroll report or something like that, if I’m a buyer at 13 and a seller at 87, and I’m expecting this big move to happen and it comes out, and it’s a dud and the market isn’t doing anything, well, I could sit there and wait. I could let it run till expiration or I could cut my losses.

If I bought 13 and the market didn’t do what I expected, I still have time value left in this contract. Maybe I sell that one at 8. I take a $5 loss per contract rather than a 13. On the opposite side if I’m seller at 87 and nothing happens, maybe I buy that back at a 94 or 95 and just take a partial loss. It might not seem, when we’re just talking $5, $6 per contract, it may not seem like a lot, but if you look at the lifetime of a trader, if you could take back $5, $6 on every trade, or even on a good majority of them, it adds up over time. We always have to think about that in relation to our trading plan is how much it adds up over time.

This was the absolute worst-case scenario on that particular trade. I wanted to share that with you because the markets you put money in, there’s risk involved and you need to know every scenario with that. With that on that strategy, I’ll take some questions. I can kind of go over what I mean by full collateralization as well. I’ll just check with Travis here and see if any questions have come across.

Travis: Yes, we’ve got a couple. Why don’t we go ahead and just go through this, Dan, and then I’m going to spend …

Dan: That sounds good, Travis. This is basically just an example of what I mean by full collateralization. Let’s say you have a futures market and you have a crude oil contract or even if you have an options on crude contract. Any time you’re dealing with margin, for instance, if I’m buying a call, I’m putting up the full amount. Any time I’m buying option, right, I’m putting up basically my risk. That’s my collateral. In that case, options are very similar to a binary option.

If I’m the seller of an option, what’s my risk? Well, in some cases, that can be undefined. I have to put up a margin to secure that position. Similarly, in the futures market, if I’m trading oil, I might have … if oil’s trading at 95 and there’s a thousand in it, I’ve got a $95,000 contract. Well, if I’ve got one side, let’s say just putting up $5,000 and the other side putting up $5,000, that’s $10,000 total securing a $95,000 contract.

The market makes a big move. Well, one side could go into what’s called margin call, which can’t happen with Nadex, and that’s what I want to explain here. If we have a buyer at 33, there’s someone selling to them at 33. If this trade is matched, in this case it’s the US500, which is the underlying of the E-mini, S&P, one contract, 33 points, every point on a binary is $1. The buyer is putting out $33.

The seller on the other side, selling at 33. Worst-case scenario is 100, which is the worst-case scenario for any seller on a binary option, puts up 67 because that’s their maximum risk. They put up 67. The clearinghouse holds all $100. That contract is now fully collateralized. The total value of that contract, the max payout for the buyer would be $67, which the seller graciously put up. The max payout for the seller is $33, which the buyer graciously put up.

Nadex holds those funds. If the contract goes to expiration and if in fact at expiration, the buying [area 00:53:28] is greater than 1309, which is our condition, the buyer gets the full $100 and that’s all full collateralization means. Basically, the full value of the contract is held with the Nadex clearing house.

In this case, one thing also to mention on binaries, if it settles at, which does happen occasionally, if it settles exactly at 1309.000 … we do take it out, I won’t get into this element, one extra point because we average numbers with the settlement. If it settles right on 1309, the seller, it settles at zero. The reason is that condition was not met. It’s not a greater than or equal to. It’s a greater than. If it settles right on 1309, it settles at zero. If it settles below 1309, it settles at zero.

In this case, the buyer is given the $100, less the 33 they put up, is a net of $67 less the exchange fees. Just to give you an example, if that was one contract, it would be $1.80 in exchange fees, 0.90 cents for the in and 0.90 cents at expiration. The seller gets $0. Now the seller in this scenario, they didn’t make any money on the trade. They did pay 0.90 cents to get in, but there was no settlement fee assigned to the seller because their trade was non-profitable. In their case, they didn’t get dinged another 0.90 cents. They just didn’t receive any money for the trade.

With that, I’ll take some questions. I do want to mention one thing here because I’m pretty sure and typically, the first time people see this, it’s thoroughly confusing. We’ve got quite a bit information on the website. You can go to nadex.com. You have a two-week demo trial, which you can find at Nadex. I’m happy to extend that and what we do is if somebody has a live account open, a live account and funds it, I’ll extend that demo for a year as long as I can and another year after that if they still …

You don’t have to be trading live with Nadex. That’s the part that I want to stress. I made it earlier, I want to make sure everybody’s familiar and comfortable before ever placing a live trade. If you need more time in the demo to do that, more than happy, I would actually encourage you to do that. Basically, to fund an account it’s $100. It’s a very low barrier to entry.

Again, it’s one of those things where I encourage people. This is not right for everybody. Trading alone is not right for everybody. I’d much rather have somebody come in and work on a demo account for a couple months and at the end of the couple months go, “You know what, this just doesn’t seem for me. I want my money back. I’m not going to place a trade.” That’s fine. I would much rather have that because it doesn’t do anybody any good. It doesn’t do Nadex any good. It doesn’t do the trader any good to come in, jump into a live account right away, put in whatever you put in, place one trade and blow up. That’s no good for anybody.

The way we keep our lights on is through exchange fees. We don’t make the markets. We don’t take the other side of the trades so we don’t get the bid-offer spread. For me, it’s valuable and one of the reasons really like working with Travis, everybody at OptionsANIMAL is really because we have the same focus on that. We want people to learn the markets and approach them in a sensible manner because that’s good just for the industry in general. It’s good for Travis and his group. It’s good for the traders. With Nadex contracts, it’s good for us as an exchange.

With that, I’ll get off my soapbox and now take any questions anybody has.

Travis: Thanks, Dan. I’ve been writing feverishly. Obviously, we got a full house here. I’ll try and (laughter) get to as many questions as possible.

Folks, here’s the thing. Obviously, as I said at the beginning of the webinar, one thing that we pride ourselves in here at OptionsANIMAL is a comprehensive approach to the markets. We certainly specialize in the stock market and options, on individual equities as well as [various 00:57:34] indices, but again, it’s that comprehensive approach. Where I see a [work that Dan and I both take center to here 00:57:43] with Nadex is one thing that I was doing before my time here with OptionsANIMAL, and some of you folks know me from Trade Monsters so on and so forth, floor trading and when I was working with a … managing money with an investment bank on the institutional side is we were very big in using binary options for a number of reasons.

It wasn’t more or less, and I’ve seen folks go around in chat room here gambling this and that, we’re reducing it as an alternative. It was an alternative to help us hedge risk with what we were doing both in the stock market as well as the option market. I guess my question for you, Dan, here, and I’m trying to again consolidate, is what is the value proposition you see with binaries for the retail trader? Again, focusing and keying in on that ability to hedge risk and what differentiates binaries from your equity option? One thing that we valued on the institutional desk with binaries was the shorter timeframe that we were afforded with binaries versus standard equity options. I guess I’m curious what your thought is on that.

Dan: You really just hit it. The short-term nature is actually really a lot of what provides the value of these options, whether it be if you’re looking for a short-term hedge, something, maybe you’ve got an oil inventory report coming out and you’ve got some exposure there. The short-term nature of this allows you to do that in a very compact nature as well as if your running strategy is where you’re a more speculative nature, you can do that at a basically what I’ll call a retail level. You don’t have to put $50,000 in an account to take both sides of the market.

You can see basically how these move. Whether your exposure’s short-term or whether you’re making a short-term speculative play in the market, that’s really one of the big values. Additionally, you can trade from [inaudible 00:59:51] from a wide array of different underlying markets. Maybe there’s been a market that you want to get into. It never fails when we look at volume reports, you can kind of tell what’s going on by the news. If oil’s hitting new highs, you can see a lot of volume pumped into oil.

There are markets that people maybe want to get into and every market is a little bit different. Even if the contracts are very similar in nature, every market moves differently. This is a great way to start out learning those markets for anybody that maybe isn’t … maybe somebody’s been trading S&P all their life and they go, “You know, I’ve looked at the currencies. I’ve just never taken that step.” It’s a good way to start and really get a good feeling on the markets.

Travis: Right, right. I think you’re spot on there and, obviously, you guys and by you guys I mean Nadex have established yourselves as one of the preeminent, if not the preeminent exchange for binary options over the course of the past three years here. Again, some of those questions that were coming up during the webinar were what differentiates you from some of the negative connotations that have surrounded binary options in the past? Binaries being a scam. This broker being a scam. We heard binary options used when we’re talking about Cyprus a month or two ago.

My understanding is what differentiates Nadex from others, and I think this is key is that again you hear that all or nothing term thrown around, and a lot of the other binary option brokers out there, it is an all or nothing and you can’t trade in and out of the binaries during the lifespan of that option. That’s something you can do at Nadex. You can trade in [and out as well 01:01:42]. Yes, it’s still an all or nothing theory, you can trade these products.

Dan: Exactly, and I think you’d mentioned just a moment ago, kind of the gambling, some people have that perception. A lot of that is because of the other shops, which over the past three, four years have kind of blown up. The US regulators have started to get more active in keeping them offshore, but there’s a lot of places springing up from around the world and the internet’s a big place. They’re not registered with any authority whereas we’re registered with the CFGC. We have to abide by their rules. All of the funds here basically are held in cash in the United States whereas who knows where they’re held elsewhere around the world or even if they’re held at all.

A couple of the other big things, and I’ll mention it, you can gamble on any market you want to in the world. We all know that. You can gamble on crude futures if you want to. The difference really in my opinion between trading and gambling is that you have a plan. You have a reasonable expectation of returns. You can study your analysis as opposed to if you’re gambling, you’re just kind of throwing it out there and hoping. Gambling is really hope.

I think where we see a lot of these shops, like you said you can get into a trade, but you can’t ever get out. You can’t close out early on most of those online platforms. Who knows if they even have a physical presence or if it’s a guy sitting in his house whereas you know we have audits from the CFGC, but you can get into the trade, but you can’t get out.

Additionally, the odds are just … most of what they offer, the odds are so stacked against you. I’ll use the example of flipping a coin. Typically, basically, when you look at a lot of those online sites, it’s an up or down. It’s very simple, very easy to do. Is it going up or down from where it’s at right now? You don’t have any transparency into their underlying. They don’t publish it whereas Nadex, we actually use the underlying market and share that data how we do our settlements so there’s transparency there.

Getting back to the other firms, once I’m in, I’m kind of at their mercy. Is it really trading here? Am I getting … ? Then they’ll tell me they’ll pay out X percent over the next hour if this thing happens. Well, one, I don’t know if it really happened or not, if it was just closed, that I don’t know. I don’t have any insight and I couldn’t get out anyway.

Also, if I was let’s say flipping a coin, I put up a dollar, Travis, and you put up a dollar, and you call heads, that’s kind of a true gambler. It should always work out pretty much 50-50, but if you start flipping that coin and you put up your dollar and instead of giving you $2 back, I only give you 0.71 cents, well, if we do that a hundred times, it’s not going to be long before your money’s gone. That’s a big thing. The odds are just so stacked against.

Whereas with Nadex, we don’t take the other side of any trade. We are an exchange. We match buyers and sellers. With that, we have the multiple strikes and as you mentioned, you can trade in and out. Most of the other times, it’s a single strike. What we offer is a contract that you can actively trade. Like any other contract that’s a true exchange traded contract, you can get in, you can get out. You can set your limits. You can take profits early. You can cut your losses. To me, those are really the huge differentiators.

Travis: I appreciate that, Dan. I think this is some great stuff. Again, folks, binary options again, and I’m looking back to the onset, if you look just let’s say 15 years ago at the futures and options market, there was a similar thing said about it at that time and again, it was a fairly unknown market to the retail investor.

Binary options, especially with firms like Nadex with the emergence of such firms are just absolutely exploding and are becoming a prominent trading vehicle both again, not only for the institutional trader, but even more so for the retail trader. That’s why I really wanted to bring you in today, Dan, and shed some light on this because I think it is something that is going to become more of a trading vehicle for the retail traders, we enter the next couple of years here.

Again, I thank you for your time that you’ve spent with us today. It’s great to get together and do webinars like this for folks. Again, we have a lot of students in the class today of OptionsANIMAL. Certainly, I want to thank all of you for being with us today.

For those of you who are with us that aren’t students, we have a special webinar we’re going to do again this Thursday. Again, this is a free webinar and it’s going to be hosted by our founder, Greg Jensen. It’s going to get into again the risk management concept using equity options, so options on individual stocks. I highly recommend signing up. I’ve got the link there. If you’re having trouble, feel free to dial that number and we’ll get you all set up. We also sent everyone an email with the link in the email so you can sign up for the course as well as we’re going to be sending out the recording to everyone once we wrap this up. We’ll be hitting you on various points to take advantage of this class again as well as sign up for the one we’re going to be doing this Thursday at noon Eastern with Greg Jensen, again, diving into the equity option market.

Dan, thanks again, buddy. It’s been great. Thanks for shedding some light on binaries. We look forward to having you back again. Maybe we can get into a little more detail on some various strategies.

Folks, if you have any further questions about Nadex, again, just go to www.nadex.com. Everything is laid right out on their site right there as far as fees, as far as the accounts you can open, so on and so forth. Everything’s right there. Just check them out if you have any lingering questions. We look forward to seeing everyone again. Hopefully, we see everyone on Thursday.

Thanks again, Dan.

Dan: Thank you, Travis. It’s great to be …

Travis: All right.

Dan: Oh, hey, Travis, real quick.

Travis: Yes.

Dan: If they do have any questions as well, they can always email me at [email protected]

Travis: Awesome, awesome. You got it right there, folks. Again, thanks everyone. I wish everyone a pleasant remainder of the week and some happy trading. Take care everyone. Bye, bye.

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