![]() If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.Calgary – The Canadian Securities Administrators (CSA) today announce the implementation of Multilateral Instrument 91-102 Prohibition of Binary Options, which makes it illegal to advertise, offer, sell or otherwise trade binary options shorter than 30 days with any individual. It is neither a legal interpretation nor a statement of SEC policy. The Office of Investor Education and Advocacy has provided this information as a service to investors. Investor Alert: Beware of Government Impersonators Targeting Fraud Victims Investor Alert: Binary Options Websites may be Used for Fraudulent Schemes Investor Alert: Don’t Invite Investment Scams to Find You If you cannot verify that they are registered, don’t trade with them, don’t give them any money, and don’t share your personal information with them. In this example, an investor could expect - on average - to lose money.Īlways Check the Background of a Firm or Financial Professionalīefore investing, check out the background, including registration or license status, of any firm or financial professional you are considering dealing with through the SEC’s Investment Adviser Public Disclosure ( IAPD) database, available on, and the National Futures Association Background Affiliation Status Information Center’s BASIC Search. This is because the consequence if the option expires out of the money (approximately a 100% loss) significantly outweighs the payout if the option expires in the money (approximately a 50% gain). ![]() Assuming a 50/50 chance of winning, the payout structure has been designed in such a way that the expected return on investment is actually negative, resulting in a net loss to the customer. For example, when a customer’s trade is “winning,” the countdown to expiration is extended arbitrarily until the trade becomes a loss.īeware of Overstated Investment Returns for Binary OptionsĪdditionally, some binary options Internet-based trading platforms may overstate the average return on investment by advertising a higher average return on investment than a customer should expect, given the payout structure.įor example, a customer may be asked to pay $50 for a binary option contract that promises a 50% return if the stock price of XYZ company is above $5 per share when the option expires. These complaints allege that the Internet-based binary options trading platforms manipulate the trading software to distort binary options prices and payouts. ![]()
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