DEFINITION of 'Nadex'

Nadex stands for the North American Derivatives Exchange, a regulated Chicago-based exchange where retail traders can buy and sell binary options directly on the exchange without a broker. Nadex, which is subject to oversight by the Commodity Futures Trading Commission, offers binary option contracts and spreads in equity indexes, commodities, forex and economic events.

BREAKING DOWN 'Nadex'

Nadex is the first and largest regulated U.S. exchange for binary options, which are simple yes/no trades with limited downside risk. Unlike OTC derivatives, there is no counter-party credit risk. Nadex clears and guarantees all trades done on the exchange. Pricing is transparent and all positions are fully collateralized at all times. Member funds are held in segregated U.S. bank accounts.

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RELATED FAQS
  1. What is the history of binary options?

    Discover the history of binary options trading, which is now one of the fastest growing investment market vehicles available ... Read Answer >>
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    Yes. Options are available for trading in almost every type of investment that trades in a market. Most investors are familiar ... Read Answer >>
  4. Where can I purchase options?

    In the United States, all options contracts go through one of several options exchanges. An investor must have an account ... Read Answer >>
  5. What is the difference between derivatives and options?

    A derivative is a financial contract that gets its value from an underlying asset. Options offer one type of common derivative. Read Answer >>
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