Binary Options Glossary
The following is a high-level binary options glossary list. There are many terms associated in binary options trading. Each trading platform has its specific terms. But there are some general terms used across many trading platforms.
This is the instrument you use to trade. You use an asset to make your predictions. You determine if the asset’s value is going to appreciate or depreciate. An asset is a commodity, stock, index, or currency.
If your prediction of the asset’s price expires at or around a target price, then your options expires at-the-money. You are entitled to a refund of your initial investment.
Call option and Put option is used extensively in binary options trading and is part of any binary options glossary. When you determine if an asset’s value will appreciate, you invoke the Call option, else you invoke the Put option.
While binary options are called so by many trading platforms, they are also known as digital options by others. Binary options are a pre-determined contract with a set payout and payback amount of money. You are in for no surprises in this type of financial trading product.
The price of the asset when it expires. This is the final price and is used to determine the status of your predictions.
This is a common binary options glossary term. The core determinant in any binary options trade, the expiry of an asset is the period of time the asset is valid. Post this period, the asset expires. Your predictions hold good only during this time.
There are varying expiry times. Some options may have expiry times of one month to a year. While some others have 60 second expiry times.
This is not an uncommon binary options glossary item. Fundamental analysis is very much part of binary options trading as it is with other forms of trading. Fundamental analysis is used to determine macro and micro economic conditions, political influences, capital markets, consumer sentiment and so on.
With strong fundamental analysis, it is easy to predict the value of an asset. It often takes years of practice to perfect fundamental analysis.
In-the-money is referred to a position in which the trader is profitable. For instance, if you used the Call option, and the value of the asset has increased before expiry, then your trade expires in-the-money. You receive a payout. The amount of payout you receive varies by binary options brokers. Good trading platforms such as Traderush Trading offer the highest payout and payback. Traderush’s 60 second option (the only kind in the industry) offers an 80% return. This is the highest in the industry.
This is the simplest of binary options glossary. Payout is the amount of money paid to you if you win a binary options contract. On an average, payout range from 71 – 85%. Some trading platforms offer better payouts than others.
The above-mentioned list of binary options glossary items is not exhaustive, but they cover some of the basic terms used.