Government Greenlights Clearing House for Binary Options Gamble Risks
Published Date: 4/15/2026
Notice
Summary
The Options Clearing Corporation (OCC) wants to update its risk system so it can handle binary options safely. This change means OCC can start clearing these new types of options while keeping risks in check. Traders and firms dealing with binary options should watch for this update, which could affect how their trades are processed and managed soon.
Analyzed Economic Effects
3 provisions identified: 3 benefits, 0 costs, 0 mixed.
OCC Will Begin Clearing Binary Options
OCC filed a proposed rule change to enable it to accept binary options for clearing. Initially OCC intends to clear only European-style binary options on equity indexes; the proposal was filed April 8, 2026 and comments are due May 6, 2026.
New Pricing and Margin Rules for Binary Options
OCC will update its STANS margin methodology to price binary options using a Black‑Scholes closed‑form pricer plus an adjustment term and will use vanilla‑option implied volatility scenarios as a proxy for margin calculations. STANS base margin is an estimate of a 99% expected shortfall over a two‑day time horizon that will apply to portfolios holding binary options.
Implied Volatility Smoothing & Pricing Constraints
OCC will include binary options in its implied volatility smoothing algorithm and apply constraints when smoothing, including bid‑ask bounds, monotonicity, and maintaining binary put‑call parity; out‑of‑the‑money wing strikes will be smoothed to decay toward zero. OCC also plans a launch stage using proxies and a transition to a mature stage (subject to Model Risk Work Group and Model Risk Management review).
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Key Dates
Department and Agencies
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