We’re excited to announce our participation in a brand-newoptions product, to be launched by the NYSE on Thursday, April 21. BinaryReturn Derivatives, or ByRDsSM, offer a streamlined approach tooptions especially suitable for beginners, but potentially useful for tradersof all types: ByRDs generate returns from the rise and fall of listed equitysecurities, with capped risk exposure for both buyers and sellers.
Here’s how ByRDs work. Bullish investors can purchase a “FinishHigh” ByRD, which returns $100 if the volume-weighted average price (“VWAP”) ofthe underlying security finishes above or below a given level on a definedfuture date. On the flip side, bearish investors can buy a “Finish Low” ByRD,which is similar to a standard listed put option in that buyers of Finish LowByRDs are bearish on the underlying. Each long contract returns $100 if yourprediction about the underlying’s price is correct – in this case, if the NYSEByRD Settlement Value closes below the strike price on expiration Friday.
ByRDs are a radically simplified version of options trading.They’re cash-settled, and you can only exercise them on the expiration date.They offer a simple way to earn potential income with a straightforward, fixedreturn and a similarly known and capped risk of loss. If your prediction iscorrect at expiration, you’ll earn $100; if you’re wrong, your loss is cappedat $100. It’s a beautifully simple product that – I’m proud to say – I helpedto conceptualize in its earliest stages.
NYSE Amex Options islaunching ByRDs this week on 60 highly-liquid equity and ETP securities,including AAPL, BABA, IBM, and SPY, with more tickers to be added in future.TradeKing will be the first retail brokerage firm to offer ByRDs on itslaunch day, April 21. Learn more about ByRDs here.
I’ve remarked time and again that options literally giveinvestors options. That is to say, understanding options equips traders withpotential ways to profit in virtually every market condition. Why not expandyour toolkit so that you can trade intelligently in up, down, sideways,volatile and flat markets? As asimplified options product, we hope ByRDs will help investors, especially thosenew to options, better understand this asset class and how it can responsiblyfit into your overall trading strategy. At the same time, we expect moreseasoned options traders to find ByRDs useful in multiple ways, too – fromhedging existing positions to a straightforward speculative play.
If ByRDs sound intriguing to you, keep an eye out for moreTradeKing-sponsored education on the product in the coming weeks. Our “OptionsGuy” Brian Overby will be happy to field any early questions you want to ask incomments below, too.
CEO, TradeKing Group
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Options involve risk and are notsuitable for all investors. Click here toreview the Characteristics and Risks of Standardized Options beforeoptions trading. Options investors may lose the entire amount of theirinvestment in a relatively short period of time.
All investments and online trading involve risk and are notsuitable for all investors. Losses may exceed the principal invested and thepast performance of a security, industry, sector, market, or financial productdoes not guarantee future results or returns. TradeKing does not makerecommendations or offer investment, financial, legal or tax advice. Beforeengaging in any trading activity, you should carefully consider your financialobjectives, level of investing experience, and ability to take financial risk.You alone are responsible for evaluating the merits and risks associated withthe use of TradeKing's systems, services or products.
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Trading Binary Return Derivatives involves significant riskof loss and is not suitable for all investors. Increasing leverage increasesrisk. Before deciding to trade binary options, you should carefully consideryour financial objectives, level of investing experience, and ability to takefinancial risk. Any opinions, news, research, analyses, prices or otherinformation contained does not constitute investment advice. Click here for more information.