Binary Return Derivatives (ByRDs)SM are "binary" options with a per-contract fixed return amount of $100.00. Binary Return Derivatives are offered in two forms:
Although Binary Return Derivatives and standard listed options share many of the same features, there are significant differences in the settlement process and profit and loss characteristics. ByRDs are cash-settled, European style and are automatically exercised if in-the-money at expiration. Standard listed equity options are physically settled, American style and must be exercised by the holder. A long standard listed call option has unlimited profit potential above breakeven until expiration. A Finish High ByRD has a maximum settlement value of $100.00 and a maximum profit potential of $100.00 less the premium paid. There are differences in settlement style (NYSE ByRD Settlement Value vs. closing price), maximum value, maximum profit and loss.
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.
Specifications and Product Overview
Index options make it possible for investors to seek either profit or protection from price movements in a market as a whole or in broad segments of a particular market.
Options on ETFs allow investors to gain exposure to the performance of an index, hedge against a decline in assets, enhance portfolio returns, and/or profit from the rise or fall of a leveraged ETF.
FLEX and LEAPS options offer investors increased flexibility in terms of contract customization (such as expiration date, exercise style, and exercise price) and time frame (with expirations of up to three years out).
Equity options, which are the most common type of equity derivative, give an investor the right but not the obligation to buy or sell a call or put at a set strike price prior to the contract’s expiry date.