Nadex instruments with different tick size than underlying market

#1

Darrell, I was wondering if these instruments offer any advantage with certain strategies. Could instruments like US 500, corn and soybeans be better for OTM trades since they tick smaller on nadex? Could US tech or silver be better for premium collection since they tick larger than the underlying on nadex?

The idea may be completely backwards, or the pricing may already account for any advantage. I can remember you writing or speaking about the US 500 spread and its tick size (you weren’t a fan of them if I remember correctly) but couldn’t find anything specific in a forum search.

Thanks for any input.

#2

That is correct NQ spreads do move slower than others so they are not my choice in spreads. That is regarding spreads not binaries. so there is no built in edge to do OTM binaries on any of those particular instruments compared to others. OTM Binaries are all based on if the market will move enough , in the proper amount of time to get that OTM binary to profit. So it can be any market, it is based on movement of the market and how close in price / strike you ca get the OTM. As far as collecting premium on spreads, there is not benefit to those particular markets for collecting premium on spreads. I like to do Iron Condors to collect premium on spreads, especially during news events.

#3

Thank you sir.

#4

US 500 Moves faster it ticks in .1 wheras ES moves in .25 Due to this the leverage is higher which may come with even higher risk on trades and higher profits as well.

US TEch 100 moves slower it ticks in 1.0 whereas NQ moves in .25 (its okay but you have to do more contracts and is better usually for smaller accounts) low risk and low profit.

This is in reference to spreads not binaries.

Silver, Copper, US Tech 100 will not be any better or worse for premium collection (guessing you mean iron condors) premium is built in regardless of the tick size based on how much the expected move is on a market.

You mentioned OTM trades… I would not do OTM trades on spreads - unless i am hedging futures etc… other than that i rarely ever do an OTM spread on any instrument regardless.

All binaries tick in the same value .25

#5

My thought had been about binaries, it never dawned on me that they all tick in .25 (been focused on spreads for a while).

Thanks