Spread Contracts

Spread contracts with Nadex are a simple and limited risk way to gain exposure to some of the world's most popular Futures and Forex markets. The Exchange is open 23-hours a day allowing you to take positions on major global stock index futures, through our Wall Street 30 contracts, popular commodity futures, such as Oil and Gold, and the main currency pairs, such as EUR/USD and USD/JPY, any time day or night.

Spreads Overview

All spread contracts are daily markets so your position will be closed against Nadexs official expiration value at the end of the trading day. For example, the underlying for our Wall St 30 contracts is the CBOT^® E-mini Dow^® Future.¹ If the Wall Street 30 spread contract is trading at 10550, you would buy ('go long') if you believed the market was going to rally and finish the day above this level and you would sell ('go short') if you believed this flagship US stock index future was going to finish the day below 10550.

In addition to the simplicity of opening an account with Nadex and the range of markets you have instant access to, Nadex spread contracts offer the additional advantage of a defined floor and ceiling for each contract. As the name suggests, the 'floor' represents the lowest level each 'spreads' market can settle while the 'ceiling' represents the maximum level, meaning all your positions are strictly limited risk, cutting down on margin calls and sleepless nights.

Trading Example

Putting all of the above together we can run through a simple example on the Wall St 30 to show how easy it is to take a position on our most popular spreads market. The underlying E-mini Dow Future is trading at 10552 so the Nadex Wall St 30 'spread contract' is trading around that level at 10550 bid -10554 offer. As mentioned above, if you believe Wall St 30 is going to fall before the end of the trading day (4:15pm ET) you would sell at 10550, but if it's your view that Wall St will rise, you would buy at 10554.

In order to limit the risk of this position, Nadex's contract includes a floor level of 10000 and a ceiling level of 11000. So in this example, the 'spread contract' has a minimum expiration value of 10000 and a maximum expiration value of 11000. Even though the E-mini Dow Future is unlikely to reach the ceiling or floor levels at the end-of-day expiration, having these barriers in place means you always know the maximum amount of money you can make or lose on each trade you do on our Exchange. Nadex attempts to set a wide enough ceiling and floor range so that the 'spreads' price will generally be very close to the level of the underlying E-mini Dow Future. The ceiling and floor levels should rarely affect the price of the Wall Street 30 spread contract, but will always limit your margin.

Now back to our example:

You believe the Wall St 30 is going higher so you decide to buy 10 contracts at 10554. You are right and by the end of the trading day (4:15pm ET) Wall St closes at 10616, so you make a profit of $620:

Profit = [closing level (10616) - opening level (10554)] x no. of contracts (10) = $620

At Nadex each contract has a value of $1 per point/tick. In this example, a 10-contract position means you make or lose $10 for every 1 point move in the Wall St 30.

The margin Nadex will ask you to put up is equal to your maximum risk on each position - hence the zero risk of any additional margin call. In the above example, your maximum loss/margin would be calculated as follows:

[Opening Level (10554) - Floor Level (10000)] x no. of contracts (10) = $5540

Your maximum loss / margin will always be displayed on your order ticket before you submit the order to the Exchange, which is a unique advantage Nadex traders have over those trading traditional Futures markets.

To view the different markets we offer, trading times, and expiry times, visit the Stock Indices, Forex, and Commodities contract specifications. For additional information about Spread Contracts, such as structure, tick sizes, and how we calculate expiration values of each market, see Learn Spread Contracts.

¹CBOT^® is a registered service mark of the Board of Trade of the City of Chicago, "Dow Jones", "DJIA", and "The Dow" are registered trademarks of Dow Jones & Company, Inc. Nadex is not affiliated with the CBOT or Dow Jones and neither the CBOT, Dow Jones, nor their respective affiliates, sponsor or endorse Nadex or its products in any way. In particular, the Nadex Wall Street 30 Contracts are not sponsored, endorsed, sold or promoted by CBOT or Dow Jones.