ForexMinute.com – The North American Derivatives Exchange (Nadex), a US-based regulated exchange, announced today its plans to launch Bitcoin binary options contracts by the end of 2014. The company will start listing daily and weekly bitcoin binary option contracts, whose prices will be based on TeraExchange’s Tera Bitcoin Price Index.
According to the Nadex press release, there has been strong demand from traders for innovative ways to trade Bitcoin safely. The exchange’s sole motive to introduce cryptocurrency-based binary contracts was thus to meet its customers’ demands. Nadex simply wanted to reduce risks associated with Bitcoin trading. Timothy McDermott, the exchange’s CEO, further elaborated their purpose by stating the following:
“Bitcoin binary options are an exciting way to participate in the bitcoin phenomenon while limiting risk. Our innovative short-term contracts provide a way to trade in a transparent, regulated market where the trader’s exposure is known before any transaction is executed. This is especially valuable given the bitcoin price volatility that has often been experienced in the marketplace.”
To novices, Binary Option Contracts are considered to be the simplest form of trading stocks, indices and currencies. Here, the investors are simply required to guess whether the price of a particular trade will go up or down at a specific date and time. For example, John is a trader who believes that BTC/USD price will be above $450 on November 30th at 1200 UTC. If his prediction is correct, he gets a preset amount. If not, he loses it.
The Nadex Bitcoin Binary Option Contract services are to be accredited by the US Commodity Futures Trading Commission (CFTC), which will ensure the safety of market participants from fraud and other kinds of trading risks. Furthermore, traders won’t be required to hold the Bitcoins in this kind of trade. The TeraExchange’s Tera Bitcoin Index mentioned at the start of this article is evaluated by CFTC, and offers only the Bitcoin data on a real-time basis.
To contact the reporter of the story: Yashu Gola at firstname.lastname@example.org