Nadex binary option - trading at excessive prices?
I recently came across Nadex and in particular their binary option markets. Such an option pays off 0 or [CO] depending on whether a specific exchange rate exceeds a strike price at a specific date.
What puzzles me is that, based on the market data from the Nadex website, there are a lot of trades at a price of .75.
This is puzzling because you have to pay trading fees and settlement fees (see here). As far as I can tell, some elite members have the lowest fees, but still the minimum (settlement) fee would be [CO].35$ to settle a contract (trading fees are zero if enough contracts are traded at once).
In other words, there are a lot of traders who buy an option at a price of .75, but if their bet succeeds, they only get 0-[CO].35=.65 back. That is, they make a loss for sure. (And for other members the fees are even higher.)
So why then are there so many trades at such a high price? I could understand if the maximum price was .65 or less, but not .75 which guarantees a loss.
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