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18 May
Binary Glossary
Asset
The underlying instrument used to determine a contract; generally a commodity, stock, currency pair, or index.
At-the-Money
A term used to describe a neutral loss and gain as a result of the asset value at expiry being the same as it was at purchase.
Call Option
The investor realizes a profit if the asset has a higher value at expiry than it did at purchase.
Current Price
The price on Option Range is as close to real time as is possible. The term current price is often used to contrast real-time reporting from most free price information. Free price information is usually delayed by fifteen minutes or more.
Digital Options
An alternate name for binary options; a type of option with a fixed rate of return and a fixed loss.
Expiry Price
The current price of the asset when the contract on the asset expires. In above / below binary trading, the result of the option trade (in the money or out of the money) is dependent upon the expiry price of the asset.
Expiry Time
The date and time when the option expires.
Exotic Options
Binary Options are a simplified version of exotic options. Exotic options have been traded on exclusive markets by brokers for years. A number of variations are now available to the customers of Option Range as binary options.
Futures
A class of indirect securities, made up of a contract to either buy or sell some sort of commodity at a time in the future. A strict futures contract requires that the holder buy or sell the commodity, while a futures option gives them the choice to do so.
Fundamental Analysis
One of the two major schools of analysis, used to examine macroeconomic data such as national economic health, central bank decisions, political events, or geological events. At its core fundamental analysis believes that assets may be mispriced temporarily, but eventually will reach their correct price. By examining macroeconomic events one can deduce what that eventual correct price will be.
Investment Amount
The amount of money invested in either a Put or a Call option; the stake.
In the Money
A term to describe an investor finishing with a profitable position. If a Call option was purchased, it is in the money if the expiry price is higher than the current price was at the time of purchase. If a Put option was purchased, it is in the money if the expiry price is lower than the current price was at the time of purchase.
Over-the-Counter (OTC)
Products which are sold directly between two parties. This is distinguished from exchange trading, which occurs via exchanges and brokers set up for the purpose of managing these transactions. Binary options are available in a limited number of exchanges, but are primarily sold as over-the-counter products online.
Out of the Money
A term used to describe an investor finishing in a position where they experience a loss. In binary options this generally results in a loss of 80% to 100% of the initial investment. If a Call option was purchased, it is out of the money if the expiry price is lower than the current price was at the time of purchase. If a Put option was purchased, it is out of the money if the expiry price is higher than the current price was at the time of purchase.
Payout
The profit realized when a contract expires in the money. In binary options the payout is generally between 75% and 81%.
Put Option
One of two option choices, in which the investor realizes a profit if the asset has a lower value at expiry than it did at purchase.
Strike Price
May be used in a number of contexts. Generally speaking, the price at which the contract option for an asset can be exercised.