New Nadex Binaries 20 Minute Contracts Coming in November

#1

It looks like Nadex will be adding 20 minute binary options on ES, NQ, TF, and YM. So I’m assuming the strike width will be thinner and/or fewer strikes.

Back in September they announced plans to introduce 1 hour contracts, but that never came to fruition. I wonder why they chose 20 minute contracts instead.

Any thoughts on how to trade these new options?

[i]Notice 560.101714

Nadex Adds Intraday 20-Minute Binary Contracts, Condense Rules, and Amends its Market Maker Agreement and Fee Schedule

Pursuant to Section 5c©(1) of the Commodity Exchange Act, and Commission Regulation §40.6(a), Nadex has submitted to the Commission its intent to add new Intraday 20-Minute Binary Contracts to its current listing of US 500, US Tech 100, SmallCap 2000, and Wall Street 30 Binary Contracts. Additionally, Nadex has condensed the contract specifications in these Rules into a more readable format. Nadex has also amended its Market Maker Agreement to remove specific duration of fast markets leading up to expiration and its Fee Schedule to note that adjustments to market makers’ balance based on the tiered fee schedule will be made on at least a monthly basis.

Nadex plans to implement these changes on November 3, 2014.[/i]

#2

US 500 (underlying E-mini S&P 500) Morning and Afternoon Expiration times: 10:00AM, 10:20AM, 10:40AM, 11:00AM, 11:20AM, 2:40PM, 3:00PM, 3:20PM, 3:40PM, 4:00PM ET CLOSE. For these expiration times, the interval width between each strike level will be one point wideand there will be nine strike levels listed for each 20-minute binary contract series.

Lunch Time Expiration times: 11:40AM, 12:00PM, 12:20PM, 12:40PM, 1:00PM, 1:20PM, 1:40PM, 2:00PM, 2:20PM ET CLOSE. For these expiration times, the interval width between each strike level will be 0.7 points wide and again, there will be nine strike levels listed.

US SMALLCAP 2000 (underlying Russell 2000 Mini) Morning and Afternoon Expiration times: 10:00AM, 10:20AM, 10:40AM, 11:00AM, 11:20AM, 2:40PM, 3:00PM, 3:20PM, 3:40PM, 4:00PM ET CLOSE. For these expiration times, the interval width between each strike level will be one point wide and there will be nine strike levels listed for each 20-minute binary contract series.

Lunch Time Expiration times: 11:40AM, 12:00PM, 12:20PM, 12:40PM, 1:00PM, 1:20PM, 1:40PM, 2:00PM, 2:20PM ET CLOSE. For these expiration times, the interval width between each strike level will be 0.7 points wide and again, there will be nine strike levels listed.

US TECH 100 (underlying E-mini NASDAQ 100) Morning and Afternoon Expiration times:10:00AM, 10:20AM, 10:40AM, 11:00AM, 11:20AM, 2:40PM, 3:00PM, 3:20PM, 3:40PM, 4:00PM ET CLOSE. For these expiration times, the interval width between each strike level will be three points wide and there will be nine strike levels listed for each 20-minute binary contract series.

Lunch Time Expiration times: 11:40AM, 12:00PM, 12:20PM, 12:40PM, 1:00PM, 1:20PM, 1:40PM, 2:00PM, 2:20PM ET CLOSE. For these expiration times, the interval width between each strike level will be two points wide with nine strike levels listed.

WALL STREET 30 (underlying E-mini Dow) Morning and Afternoon Expiration times: 10:00AM, 10:20AM, 10:40AM, 11:00AM, 11:20AM, 2:40PM, 3:00PM, 3:20PM, 3:40PM, 4:00PM ET CLOSE. For these expiration times, the interval width between each strike level will be nine points wide. There will be nine strike levels generated: one considered ATM (at the money) with four above and four below that level. This is true for all of these markets.

Lunch Time Expiration times: 11:40AM, 12:00PM, 12:20PM, 12:40PM, 1:00PM, 1:20PM, 1:40PM, 2:00PM, 2:20PM ET CLOSE. For these expiration times, the interval width between each strike level will be seven points wide. These contracts will also have nine strike levels listed.

#3

Yes see above for strike widths on the new 20 minute binaries from publication on Friday.

The reason the 1 hour ones did not come to fruition is because me and a lot of other traders told them it was a bad idea. They where going to replace the 2 hour contracts with the 1 hour contracts. This would eliminate trades ie on news that happened ie at 10 AM on short term contracts. Would make it difficult to do intraday OTM contracts near the close of the hour and many other reasons.

These contracts are in addition to the existing 2 hour contracts that expire each hour.

I covered several ways to trade them today on my radio show.

Add on the 20 min range indicator and look at 2 min bars for EPC and ETC trades.

Using the range to know if one should do OTM or ITM and expected volume for when to enter.

And how to choose between strangles and straddles.

I will do more official education after they are released.

We should see them on demo next week most likley then live after that.

The scanner has already been coded to pick up the 20 minute contracts out of the gate so we are ready to go.