On April 21, 2016, the NYSE Amex Options platform of the NYSE MKT exchange commenced trading of Binary Return Derivatives (ByRDsSM). ByRDs are a new listed equity options product with limited profit potential and defined risk for both buyers and sellers.
Trading on the NYSE Amex Options platform, ByRDs are based on an underlying equity security, such as a stock or an ETP. They offer a fixed return of $100.00 per contract, based on whether the volume-weighted average price of the underlying security is above or below a given level on a defined future date. They also provide a capped maximum risk to the seller of $100.00 per contract, less the premium received for selling the option.
ByRDs are cash-settled and exercisable only at expiration, unlike standard listed equity options. ByRDs share some of the same features as standard listed options, such as standardized expiration dates and clearing, and settlement at the Options Clearing Corporation.
ByRDs are offered on NYSE Amex Options in two forms:
Finish High ByRDSM: similar to a standard listed call option in that an investor purchasing a Finish High ByRD is bullish on the underlying security. Each long contract returns $100.00, if the NYSE ByRD Settlement ValueSM closes above the strike price on expiration Friday.
Finish Low ByRDSM: similar to a standard listed put option in that an investor purchasing a Finish Low ByRD is bearish on the underlying security. Each long contract returns $100.00, if the NYSE ByRD Settlement Value closes below the strike price on expiration Friday.
ZEMA collects multiple financial market reports. To learn more about ZEMA’s vast data coverage, visit http://www.ze.com/learning/data-coverage/.
Data Sources: NYSE | Effective Date: April 21, 2016