With that in mind, our list of binary option destinations recommended for US traders must begin with regulated exchanges. Some might say it has to end with them too, but there are in fact a few brokerages out there, getting by in a legally grey area, which also peddle binary option trading services to the US public. Let’s not cut ahead of the chase though and take a closer look at NADEX, CX (Cantor Exchange) and the CBOE (Chicago Board Options Exchange) first.
As you may have noticed, all these “institutions” are called exchanges, rather than brokerages and there’s a good reason for that. Unlike CySEC-regulated binary option brokers, these US-based and focused exchanges do not trade against their own clients. According to what can essentially be called the “CySEC business model”, brokerages currently operating within the EU and in other non-US jurisdictions, act as their own, sole price-makers. What this means is that the broker establishes the pricing on the underlying commodities, after which it essentially goes up against its own customers. If you think trading against someone on a playing field the rules of which you yourself establish isn’t particularly fair, you are right. The European way of trading binary options has long been frowned upon, even by local financial authorities. US authorities have been very categorical in their refusal to allow the proliferation of this binary option business model within their own jurisdiction.
The US model, used by NADEX, CX as well as the CBOE, is the exchange-based one, where traders act as price-makers, and where all the back and forth happens among traders. Whenever a trader closes a position in the money, another trader ends up out of the money, on the other end of that same proposition. This way, the NADEX-type binary option game could be called a zero-sum one, were it not for the commission the exchange cuts on every binary option trade.
While it is focused on the US market, NADEX is actually accessible to European traders too. It isn’t really surprising though that those used to the single market-maker model will find NADEX’s exchange-based approach a little confusing at first. What one needs to understand about NADEX is that its pricing is shaped by the proven mechanics of supply and demand. The profits on a single trade are always capped, since upon expiry, a binary option is worth either exactly $100, or $0. There is no middle ground. Before expiry, options can obviously be sold for different sums between $0 and $100, depending on the likelihood of success. To increase profit potential at NADEX, one can purchase several options in one go. The minimum required deposit at NADEX is $100.
With the exchange-based business model, liquidity is always an issue. Since they are responsible for the pricing, traders represent a valuable resource for binary option exchanges in more ways than one. If there’s lack of trader interest in a specific type of underlying asset, pricing will simply be unavailable, which means that even those specifically looking to trade that asset will be denied.
While NADEX is focused on retail traders, CX brings a different sort of approach to the table. By offering an exchange-based platform to technology providers, they are looking to bring CySEC-based binary option actors into the US fold, by granting them access to the market, as well as to the technology needed to implement the US business model. The tradable asset-wise retail offerings of CX are currently not overly impressive.
The CBOE is aimed at US traders first and utmost. It is a physical exchange, so trading binary options with the CBOE is only possible through a US -based broker. In theory, international brokers approved for US option-trading can be used for this purpose as well.
Finpari is a non-US brokerage that offers binary options to US-based customers. The Finpari model is not the above-described exchange-based one, and as such, it cannot offer 100% returns on winning trades. The Finpari returns are in the 80-87% range. The minimum deposit at Finpari is $250. This broker is not regulated.
Another non-exchange binary option solution for US traders is MarketsWorld.
MarketsWorld is regulated by the financial authorities of the Isle of Man. The minimum required deposit with this broker is only $10, and the minimum trade amount has been set to $1.
Source by Signe J Petersen