Digital 100s

Digital 100’s is a newer name for an old form of digital options trading. This tutorial explains how they’re structured, the key terms you need to understand, and which brokers offer them.

Best Brokers Offering Digital 100s

Based on our tests, these are the top trading platforms for offering digital 100-style products:

Digital100s – An Option By Another Name…

If you think digital 100’s sounds like NADEX or 0-100 options you are correct.

So, what exactly are Digital 100s? They are a similar style of binary options offered by firms like IQ Option or IG, who have a specific product named this or a product that operates like this.

The change does nothing to alter the trading but it does bring the name in-line with what other binary options exchanges have offered making them more appealing to former spot-style traders.

How Do They Work?

In essence the Digital 100’s are a spread bet, with a binary outcome. A binary style Digital 100 does have an expiration and a max payout/loss at that time.

At expiry the option is worth all or nothing, $0 or $100. During its life however, the value will change based on market pressures, the cost of the underlying asset and the chance the option will close in the money.

For example, if you are looking at a Digital 100 for the EUR/USD and the current price is $50 you pay $50 to own it. If the option closes in the money it pays out $100 which means you get your $50 back plus 100% profit.

If the price of the options is $40 when you buy it your return would be $60 or 150%, if the price of the option is $60 when you buy it the return would be $40 or 66%.

Ladder Prices

Digital 100’s are offered in several option types but the most common is the Ladder. Ladders are sets of strikes with a common expiry. The strikes are a range of prices that the underlying asset can close above or beneath. Traders choose their strike and buy at the market price.

• An at-the-money strike can cost about $50 because there is sometimes a 50/50 chance it will close in the money, though this depends on expiry time and market conditions like volatility.
• In-the-money strikes cost more because there is a higher chance of the closing in-the-money, less risk, and out-of-the-money strikes cost less because there is a lower chance of them closing in-the-money, more risk.
• Other types of Digital 100’s you may find include One Touch, Up/Down and Range.

The best part about this type of binary option is selling them and I don’t mean closing a position. Unlike spot style trading where you have to buy a put when you are bearish Digital 100’s trade like forex and commodities, you sell them to open in the hopes of buying them back at a lower price.

This means you get a credit in your account for the amount of sale but are also liable for the full $100 should the option close in-the-money. The good news is that your risk is not $100 but $100 minus the price you received. If you sell an option for $75 you are only liable for the other $25.

Lots

Digital 100’s typically trade in lots just like other types of contracts. Each lot will cost somewhere between $0 and $100, if you want to trade more than that you will have to buy more lots.

For instance, if you like to trade $1000 at a time and the price of the option is $65 you will need to buy 15 lots, $1000/$65=15.38 rounded down to 15. Positions show in your account like this, +10, for a bullish or long positions and like this, -10, for a bearish or short position. Expiry range from 5 minutes on some products at NADEX.