NYSE Tweaks Binary Return Derivatives, Whatever Those May Be
Published Date: 10/30/2026
Notice
Summary
NYSE American is updating the rules for trading Binary Return Derivatives (ByRDs), a type of options contract. They’re switching from using a fancy average price to just the closing price of the stock to settle these contracts and adding new rules for which stocks can be used. These changes kick in right away and could affect traders by making pricing clearer and more straightforward.
Analyzed Economic Effects
5 provisions identified: 2 benefits, 0 costs, 3 mixed.
ByRDs settle using Closing Price
The Exchange will determine the settlement price for Binary Return Derivatives (ByRDs) using the underlying security's Closing Price as reported by the primary listing market on the business day of expiration (or the last trading day prior to expiration if expiration is not a business day), replacing the prior composite-price VWAP settlement method. This change is operative upon filing of the rule change.
Tighter listing rules cut eligible stocks to 100
The Exchange raises the minimum market capitalization for eligible underlying stocks from $40 billion to $290 billion and adds a requirement that an underlying stock must have an average daily trading value in the primary listing market's closing auction of at least $10 million over the prior six months. Applying these thresholds reduces eligible ByRDs underliers from 305 to about 100 securities, with a median closing auction value of $92.5 million per day across those 100.
Price-checks removed; $1.02 maximum price enforced
The Exchange will not apply its standard Arbitrage and Intrinsic Value Price Reasonability Checks to ByRDs orders and quotes. Instead, the Exchange will reject Limit Orders and quotes for ByRDs above the Exchange-designated maximum price for the class, which the filing identifies as $1.02. Transactions that deviate from Theoretical Price by $0.50 or more or are above $1.02 are treated as Catastrophic Errors under the Exchange's rules.
No more settlement rounding at expiration
The Exchange will eliminate the prior practice of rounding the settlement price up by $0.01 when it exactly equaled an expiring strike. Instead, Finish High ByRDs will return $100 if the underlying closes at or above the strike, and Finish Low ByRDs will return $100 if the underlying closes below the strike. The fixed cash settlement amount per in-the-money contract remains $100.
Market makers not forced to continuously quote ByRDs
A Market Maker appointed in an underlying security will not be required to enter continuous quotations in the corresponding ByRDs option contract; the Exchange will only apply its quoting expectations if a Market Maker chooses to enter quotes. The Exchange states this is appropriate because appointments occur automatically at the underlying level.
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