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U.S. Futures Exchange to offer weekly binary options based on single asset performance

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The U.S.

The U.S. Futures Exchange has announced plans to offer weekly binary options, each with nine or more strikes, to allow retail investors to take positions on the performance of single assets including oil, gasoline, gold, silver and the euro. Valued at USD1,000, the contracts will begin trading on October 15.

USFE’s performance binary options will allow speculative trading on a single asset’s weekly price movement. Positions are taken based on perceived probability that the asset’s value will be a specific price or higher at expiration. Contracts will open for trading on Monday mornings and expire on Friday afternoons.

‘Retail brokers and customers are looking for new short-term, limited risk trading opportunities that are simpler to understand than traditional derivatives,’ says USFE chief executive Satish Nandapurkar.

‘Though the contracts are structured differently, USFE’s binary options trade with the same transparency and on-exchange protections as existing commodity and currency futures.

‘The first five selected assets show proven volatility on a weekly basis. Oil, gasoline, gold, silver and euro prices are also critical points of reference in the trading community. Our contracts provide another way to hedge and speculate in these active markets.’

The single asset performance contracts are the latest in USFE’s complex of binary-style products, which trade on an all-or-nothing basis and are fully margined. USFE’s binary contracts are worth USD0 or USD1,000 at final settlement.

USFE listed binary event futures in April that let investors take a position on the outcome of the Chicago Board of Trade merger. Those contracts settled on July 13 following the Chicago Mercantile Exchange’s purchase of CBOT.

USFE, which was established in its present form last year following Man Group’s investment in the former Eurex US exchange, offers derivatives products designed to meet the needs of retail, hedge fund and institutional customers in a regulated, centrally-cleared futures and options exchange.

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