About CX

Contracts & Pricing

Whether you are new to trading binaries or you are seasoned trader, it is important to understand how both contracts and pricing work on the Exchange. There are many features that are unique to CX and, further, unique to a specific trading interface.

 

Please read below to find out more about:

• Contracts

• Pricing

 


CONTRACTS ON THE EXCHANGE

Before you start trading, you should learn a few things about trading contracts on the Exchange.

 

To begin, each digital option is entered into as a contract on the Exchange.

 

Any FOREX & metals contract is an agreement between two Participants with opposing positions on the market (that is, matching 1 Participant in the Buy/Call/Above position with 1 Participant in the Sell/Put/Below position). CX serves as an anonymous electronic meeting place to match buyers and sellers in the market.

 

Each contract settles at $1 on CX.

 

If you are correct or in-the-money at the time of the designated expiry, your contract is worth $1.

An in-the-money Buy contract has a strike price lower than the current market value of the underlying asset.

An in-the-money Sell contract has a strike price greater than the current market value or the underlying asset.

 

If you are not correct or out-of-the-money at the time of the designated expiry, your contract is worth $0.

An out-of-the-money Buy contract has a strike price higher than the current market value of the underlying asset.

An out-of-the-money Sell contract has a strike price lower than the current market value of the underlying asset.

 

If you are at-the-money at the time of the designated expiry, your contract is worth $.50.

An at-the-money contract has a strike price that is identical to the current market value of the underlying asset.

 

 


PRICING ON THE EXCHANGE

The price of each contract can be thought of as a percentage likelihood the given event will occur.

For example, if Participant A purchases a Buy position for $.80 for Outcome 1, then Participant A thinks Outcome 1 has at least an 80% chance of occurring. The Exchange then anonymously matches Participant A with Participant B, who thinks Outcome 1 has a 20% chance of not occurring, and therefore purchases a Sell position for $.20.

Each contract settles at $1 on the Exchange. When the Exchange anonymously matches two Participants in the market for a contract, the total will always be $1 or 100%

Please note: If you are using the TradeWx trading interface, please visit TradeWx Help for pricing information specific to the CX weather market.

Let’s start with the basics…the difference between the trade price and the Trade Margin costof a position. The trade price of a position is the agreed upon price of that position related to the probability of an event settling above the given strike, while the Trade Margin cost of a position is the cost to enter into that position.

On any trading interface that accesses the CX FOREX & metals market, the price of a Buy/Call/Bid/Above position reflects the trade price and Trade Margin cost of that position.

For example, if you purchase a Call position for $.80, the trade price and Trade Margin cost of that position is $.80.

Because a Put position is trading on the opposing outcome, that the underlying market will settle below the given strike price, the trade price of a Put position is inverted from the Trade Margin cost. The price of a Sell/Put/Offer/Below position is reflected differently, depending on which trading interface you are using to access the CX FOREX & metals market.

If you are using the CX  Tradologic Trading Interface, the price of Below (Sell) position reflects the trade price of that position. To calculate the Trade Margin cost of that position, you must subtract the trade price from 100. For example, if there is a Below (Sell) position shown on the CX Markets app for a price of $35, the trade price of that position is $0.35 and the Trade Margin cost is actually $0.65.

(100 – (trade price)) = Trade Margin cost

(100 – ($0.35)) = $0.65

If you are using the Tradologic trading interface, the price of a Put (Sell) position shown in the red Put button on the main interface screen reflects the Trade Margin cost of that position. To calculate the trade price of that position, you must subtract the Trade Margin cost from 100. Please read more below about the pricing on the Tradologic trading interface below.

 

Pricing on the Tradologic trading interface
Call View vs. Put View of the Market

When using the Tradologic trading interface, you must be aware of the difference between a Call view of the market versus a Put view of the market.

As previously mentioned, on any trading interface that accesses the CX FOREX & metals market, the price of a Buy/Call/Bid is, both, the trade price and the Trade Margin cost of that position.

For example, if there is a Call opportunity shown in the blue Call button on the main Tradologic interface screen for a price of 70, the Trade Margin cost and the trade price of that position are, both, 70.

As described above, because a Put position is trading on the opposing outcome, that the underlying market will settle below the given strike price, the trade price of a Put position on the Tradologic trading interface is inverted from the Trade Margin cost. The price shown in the red Put button on the main Tradologic trading interface screen is the Trade Margin cost of that position. To calculate the trade price of a Put position, you must subtract the Trade Margin cost from 100.

For example, if there is a Put opportunity shown in the red Put button on the main trading interface screen for a price of 20, the Trade Margin cost of that Put position is $0.20 and the trade price is actually $0.80.

(100 – (Trade Margin cost)) = trade price

(100 – ($0.20)) = $0.80

When looking at your Account Reports, you will notice the trade price is displayed for all contract positions, regardless of whether it is a Call position or Put position. The Trade Margin cost is not shown in your Account Reports.

The amount that is deducted from your balance when purchasing a position is the Trade Margin cost. 

Call View

A Call view of the market means that prices are shown and used in relation to the probability that the underlying market will settle above the given strike price. Recall, Calls pay $1.00 per contract if the underlying market settles above the strike price. 

When working with a Call view of the market, the trade price for each position (whether it is a Call or a Put  is being displayed/used.

Put View

A Put view of the market means that prices are used in relation to the probability that the underlying market will settle below the given strike price. Recall, Puts pay $1.00 per contract if the underlying market settles below the strike price.

When working with a Put view of the market, the Trade Margin cost for each position is being used.

When attempting to close a Put position prior to its expiry using the Expand Trade tab, you will be operating under the Put view of the market. Therefore, when entering a price in the Limit Price field, you must enter the trade price of your desired position, not the Trade Margin cost. When submitting a close order request using the Limit Price feature in the Expand Trade tab, the price used will be 100-minus-the-price-entered in the Limit Price field.

For example, let’s say you purchased a Put position for a price of 70 and you decide that you want to close out of your position early using the Expand Trade tab, but only when the price of the Put reaches 75. You would enter 25 in the Limit Price field.

(100 – (Trade Margin cost)) = trade price

(100 – (75)) = 25

This will submit a Call (Buy) order with a Limit Price of 25, in attempt to close your open Put position. If your price is matched right away, your existing Put position will be closed. Otherwise, you will eventually see a Put opportunity appear in the market for a price of $0.75 (100 – 25 = 75), which is your Call (Buy) order available for other Participants in the market to be able to trade on.

Recall, each contract is an agreement between two Participants on opposing sides of the market. When a Participant purchases a Put (Sell) position for $.75, there is another Participant purchasing a Call (Buy) position for $.25.