At the Money

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When the underlying (indicative) market price is equal to a binary option’s strike price, the binary option is “at the money.” At expiration, only in-the-money options get the $100 payout, so an at-the-money binary option will still expire worthless.

A Nadex binary option can be at the money whether you buy or sell it.  It refers to the location of the underlying market price (the money) relative to the strike price. An at-the-money option has a strike price at or very near the current price of the underlying (indicative) market.

The delta of an option shows how much an option’s price will change when the price of the underlying asset changes. A delta of one (1.0) means that if the underlying price goes up $1.00, the option price also goes up a dollar. If the underlying price moved by $1.00 and the value of an option moved $.50, then the option’s delta is 0.5.

For binary options, the pricing trades between 0 and 100. The price reflects the probability at that moment that the option will end up expiring in the money. So if the underlying market price is trading at or near a binary strike level, the binary option would be an ATM binary. Both the buyer and seller of the binary have about the same chance of profiting at expiration.

In other words, both the buyer and seller of an at-the-money binary option will have a 50% chance of the option finishing in the money at expiration.

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