Binary option glossary
Terms associated with binary options trading explained.
Broker — Binary options brokers host the trading platforms from which you can execute trades. Before you can trade binary options, you must register an account with a broker. Call Option — A type of binary option that becomes profitable when the unit price of the underlying asset rises above its strike price at expiration.
It is a tool often used to aid in technical analysis. Commodities — Basic goods that are either grown — e. The price of the binary option changes as the exchange rate between the two currencies moves up and down. Expiry Time or Expiration — The point at which the binary option expires. Every binary option comes with a predetermined expiry time.
Binary Options Glossary
Fibonacci Retracements — Fibs or fib lines are created via measuring very specific points in a price movement. These are used as an indicator to help determine what a price is likely to do. Asset It is the instrument on which you will base your entire trade on. At-the-money It is a term described when at the expiry time of trading you get no return but you also do not lose anything because the price of the asset does not change through the entire trading period.
Call option This is the choice made by the trader out of the two options given in which the trader has full confidence that it will provide him with a return on his investment.
Glossary Of Terms From The World Of Binary Options
Current Price This is the price of the asset got from reports in real time. Digital options It is another term for Binary options which has a fixed return as well as fixed loss.
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Expiry Price This is the current price of the asset when trading closes according to the chosen expiry time by the trader. Payout In the Binary option glossary this has been elucidated clearly that this is the return one gets if their trading ends in an escalation of the asset price.
Over-the counter This is referred to the products sold directly between two separate groups. Out-of-the-money This is referred to the situation in which the investor makes a loss i. In-The Money This is referred to a situation where in the investor makes a profit. Investment Amount The amount of money invested in any of the contract options like call or Put. Binary Options Glossary consists of other terms but it was beyond our discussion here.
Binary Option Definition
We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. What Is a Binary Option? Key Takeaways Binary options depend on the outcome of a "yes or no" proposition. Traders receive a payout if the binary option expires in the money and incur a loss if it expires out of the money. Binary options set a fixed payout and loss amount. Binary options don't allow traders to take a position in the underlying security. Most binary options trading occurs outside the United States.
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options binary terminology
These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Related Terms Asset-or-Nothing Put Option Definition An asset-or-nothing put option provides a fixed payoff if the price of the underlying asset is below the strike price on the option's expiration date.
How Digital Options Work A digital option is a type of options contract that has a fixed payout if the underlying asset moves past the predetermined threshold or strike price. Currency Binary Option Definition A currency binary option is a way to make very short-term bets on exchange rates. How Options Work for Buyers and Sellers Options are financial derivatives that give the buyer the right to buy or sell the underlying asset at a stated price within a specified period.