Fixed return options

From Wikipedia, the free encyclopedia

Contents 1 Definition 2 Educational Materials 3 See also 4 Notes

[edit] Definition

Fixed Return Options, also known as FROs or binary options, are a new investment instrument launched in May 2008. Unlike traditional standardized option contracts, FROs are all-or-nothing options that pay a fixed amount ($100) if exercised in-the-money; if they expire out-of-the-money, they pay nothing. Because there are only two outcomes – payment or no payment – these options are also referred to as binary options.

FROs were invented by a consortium of financial services executives, led by an executive team at the American Stock Exchange and Donato A. Montanaro, now Chairman and CEO of online brokerage firm Tradeking.[^{[1] [2][3]}

[edit] Educational Materials

• FROs free educational whitepaper, TradeKing
• How Binary Options Work at Financial-edu.com
• Online Binary Options Calculator, sitmo.com
• Basic Fixed Return Options Structure
• Understanding Fixed Return Options

[edit] See also

• binary options
• American Stock Exchange
• Tradeking

[edit] Notes

1. ^ SECURITIES AND EXCHANGE COMMISSION Release No. 34-56471; File No. SR-OCC-2007-08, September 19, 2007. “Self-Regulatory Organizations; The Options Clearing Corporation; Notice of Filing of a Proposed Rule Change Relating to Binary Options”.PDF download.
2. ^ “SYSTEM AND METHODS FOR TRADING BINARY OPTIONS ON AN EXCHANGE”, World Intellectual Property Organization filing.
3. ^ Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options.