Binary Options

So, you want to start getting to work on trading Binary Options? While we admire your enthusiasm, we think it would be best if you gave this handy micro-glossary a read. While we make Binary Options sound simple enough, like any other business there comes a fairly unique catalogue of terms once should familiarize oneself with long before one hits the trading floor.

Below are some of the most frequently used terminologies when dealing with Binary Options. We will be dropping these terms frequently ourselves, so give this glossary at least one read before moving deeper into the site.

You’ll thank us later.

• Asset: The “thing” you’re trading. Examples can be: Stocks, Commodities, Index, or a Forex Pair.
• At-The-Money: This is a common term used to describe an incident in which an option’s Expiry Price (its “end” price) is identical to the Option Buying Price (its “beginning” price).
• Call Option: This is an option in which a trader is supplied with a fixed profit, so long as the underlying asset is higher in value at the time of expiration than it was at the time of its purchase.
• Current Price: This is the primary price traders should be paying attention to, as it reflects the most recent real-time data concerning an asset’s value.
• Digital Options: This is, really, just another way of referring to Binary Options. It may be easier to remember, as it plays up the digital aspect of how these options behave (remember our 1s and 0s analogy?).
• Expiry Time/Date: In a nutshell, an option’s Expiry Time/Date is the time and date at which an option expires. It is at this moment that an option/trade is determined to be either In-The-Money, or it is found to be Out-Of-The-Money.
• Fundamental Analysis: A trade can be affected by any number of outside factors (socio-political, for instance). Fundamental Analysis is the method of looking at how all of these little (or big) factors can sway the value of an option.
• In-The-Money: This typically refers to the condition of an option when its Strike Price is more valuable than the market price of an underlying asset. This means good news.
• Out-of-The-Money: This term describes when an option is not faring so well, when its Strike Price of an underlying asset is actually below the market price.
• Put Option: Consider this a Bizarro Call Option. This is when the underlying asset’s price is lower than it was at the time of purchase come an option’s Expiry Time.
• Range Option: This variance of a Binary Option demands that a trader predicts if an asset’s Expiry Price will fall in or out of a certain, predetermined range.
• Strike Price: This term describes the price of which an asset must meet by its Expiry Time in order to be considered In-The-Money (or Out-of-The-Money).
• Technical Analysis: Analysis that looks to the past trends of an asset/option in order to make an educated guess as to the nature of its future.
• Touch Option: This variance of Binary Options asks that a trader predict if an asset will touch a predetermined Strike Price before reaching its Expiry Time.