Generally speaking, binary options platforms do not charge up-front fees from traders, instead making money through the simple difference between options that expire in the money vs options that expire out of the money. While this is a simple arrangement in theory, it also means investors need to analyse money payout options in percentage terms in order to get an accurate representation of risk.
In essence, the fee for trading is implied in the difference between payout amounts, with brokers using a simple formula to work out the difference between in-the-money and out-of-the-money options. The following formula is used to work out platform gain, being applied for each base asset with the same expiry characteristics.
S = platform gain
V1, V2 = the turnovers of transactions made for each outcome
W = in-the-money option payout in percentage terms
L = out-of-the-money option payout in percentage terms
Depending on the in-the-money and out-of-the-money payouts, each trader can work out how often they need to be right in order to make a profit. While it will always be more than 50 percent, this amount can vary significantly between brokers and markets. Fees are always charged in one way or another, however, with some binary options brokers also charging fees directly through contracts to enter and exit trades.
In the United States, each Nadex contract traded costs $0.90 to enter and $0.90 to exit, with the fee capped at $9. When options are traded through the Chicago Board Options Exchange (CBOE), options brokers are able to charge their own commission fees.