Binary Return Derivatives (ByRDs)SM are “binary” options with a per-contract fixed return amount of $100.00. Binary Return Derivatives will be offered in two forms:
- Finish High ByRDSM
A Finish High ByRD is similar to a standard listed call option in that an investor purchasing a Finish High ByRD is bullish on the underlying security. Each long contract returns $100.00 if the NYSE ByRD Settlement ValueSM closes above the strike price on expiration Friday.
- Finish Low ByRDSM
A Finish Low ByRD is similar to a standard listed put option in that an investor purchasing a Finish Low ByRD is bearish on the underlying security. Each long contract returns $100.00 if the NYSE ByRD Settlement Value closes below the strike price on expiration Friday.
Binary Return Derivatives exercise and assignment is based on an all-day expiration Friday NYSE ByRD Settlement Value. So, it is possible for the standard listed options to be in-the-money at expiration and the ByRDs to be out-of-the-money or for the ByRDs to be in-the-money and the standard listed options to be out-of-the-money. Other significant differences may exist. The investor must understand the differences in risk/reward profiles and settlement between standard listed options and Binary Return Derivatives and before entering into any Binary Return Derivatives transaction.