Nadex Binary or Spread for Hedging Futures

[traderjo]

Does anybody uses Nadex Binary for hedging underlying Futures position on CME
Nadex Binary have bad spreads so is it effective? both intraday or overnight
and before the Binary expiry time one has to manage the Futures margin position

attached screen shot .. but I made a stupid error on the futures profit calculation when Futures closes at 2916 scenario

 

[GregorySG9]

Huge spread +1$ trading fee per contract... Expensive!

 

[traderjo]

 

[traderjo]

Huge spread +1$ trading fee per contract... Expensive!

Yes those are the negatives nut I am wondering if anybody has tried it in real life!

 

[GregorySG9]

This is basically binary options on CFD. Crazily expensive!
Only advantage to me: it requires lower capital than futures options but with the micro futures, there's not much difference.

 

[maximumpossiblesuffering]

How about making your own binary like hedge using a tight vertical spread with liquid CME futures options?

 

[traderjo]

How about making your own binary like hedge using a tight vertical spread with liquid CME futures options?

so in this example what would be the strikes to do such a self made exchange Binary? strikes above 2924?

 

[maximumpossiblesuffering]

so in this example what would be the strikes to do such a self made exchange Binary? strikes above 2924?

That is up to you. I am assuming you are intending to hedge a short ES position. Your pseudo binary could be long 2925 / short 2930, it could be long 2995 / short 3000, or whatever you want, but the closer the strikes are together, the more binary the position. Obviously you size the trade according to the hedge you need.

Destriero mentioned last month about a binary versus a Canadian Dollar position. Hopefully he will chime in as he has at least 1,000 times more knowledge in this area than I do. In the alternative, ask him your question in one of his journals.

 

[traderjo]

That is up to you. I am assuming you are intending to hedge a short ES position. Your pseudo binary could be long 2925 / short 2930, it could be long 2995 / short 3000, or whatever you want, but the closer the strikes are together, the more binary the position. Obviously you size the trade according to the hedge you need.

Destriero mentioned last month about a binary versus a Canadian Dollar position. Hopefully he will chime in as he has at least 1,000 times more knowledge in this area than I do. In the alternative, ask him your question in one of his journals.

Yes correct in the original example intention was to hedge the Short ES @2917. I will check the pseudo binary ...