HedgeStreet's binary options are typically short-term in nature, and are based on the value of the underlying instrument.The payout is determined by whether the option is in-the-money or not (they are sometimes referred to as "yes-no" or "cash-or-nothing" options). HedgeStreet also offers futures Hedgelets, or "capped futures" contracts, which feature a variable payout depending on how much the underlying asset moves up or down. HedgeStreet currently offers contracts on commodities such as gasoline, crude oil and gold, as well as unique financial instruments such as Housing Prices, Consumer Price Index (CPI) and weekly Mortgage Rates that are not available on any other market. HedgeStreet is regulated by the Commodity Futures Trading Commission (CFTC).
Under the agreement, CBOE and HedgeStreet will collaborate on retail distribution of their contracts via joint marketing initiatives and will share certain technologies and hosting facilities to achieve cost and distribution synergies. The agreement also involves an equity investment by CBOE in HedgeStreet.
"CBOE is extremely pleased to join forces with HedgeStreet as we share a common culture of innovation and a willingness to develop new approaches to trading," said CBOE Chairman and CEO William J. Brodsky. "CBOE's equity investment and alliance with HedgeStreet will serve to build momentum for binary options and this exciting new breed of futures products. We look forward to launching a new wave of jointly- developed one-of-a-kind products, while bringing HedgeStreet's existing products to a broader audience."
John Nafeh, Chairman and Founder of HedgeStreet said, "By combining HedgeStreet's powerful online model with CBOE's reach, financial strength and technology, we are creating a winning combination."
"We are thrilled to team up with CBOE. Because each of us brings complementary assets, we will be able to leverage our unique strengths to capture emerging opportunities and offer investors a multitude of new and interesting financial contracts online," said HedgeStreet CEO Steve Race.
CBOE's equity investment is part of a larger round of equity and debt financing recently closed by HedgeStreet, with a portion also provided by Norwest Ventures Partners, a leading venture capital firm active in technology and information services.
About HedgeStreet
HedgeStreet Inc. is the only U.S. designated market that lets online investors trade innovative instruments based on economic events. A designated contract market (DCM) and a registered clearing organization (DCO), HedgeStreet is subject to regulatory oversight by the Commodity Futures Trading Commission (CFTC). For more information on HedgeStreet visit www.hedgestreet.com.
HedgeStreet, launched in 2004, has created and offers trading on a wide array of unique derivatives products that do not exist on any other market, where traders can hedge or speculate on the outcome of economic events and commodity price moves.
Generally, HedgeStreet's binary options are $10 contracts between a buyer who believes that a certain strike price will be reached or a certain event will happen on the expiration date, and the seller taking the position that it will not. If the price is reached, or the event does occur, the buyer receives $10 per contract, and the seller receives nothing. HedgeStreet's Futures Hedgelets are financial contracts based on the price of an underlying commodity, index or event, with a variable payout ranging from zero to $50. In both cases, the cost of the contracts will fluctuate based on the perceived probability of the stated outcome being reached.
About CBOE
CBOE, the world's largest options marketplace and the creator of listed options, is regulated by the Securities and Exchange Commission (SEC). For additional information about the CBOE and its products, access the CBOE website at: www.cboe.com.
