Binary Options Glossary




► What is an Asset

An asset is an underlying instrument that is used to determine the type of exercise of a binary option contract. An asset may be a Forex Currency, a Commodity, a Stock, or an Index. Underlying assets are also called Underlying Securities.


► What is an At-the-Money Option

The at-the-money option is the contract in which the strike price equals the market price of the underlying asset. This point can be described also as a Break-Even-Point point.


► What are Binary Options

Binary options are financial contracts that offer only two possible outcomes, either they are in-the-money and they win, or they are out-of-the-money and they lose. There are two main categories of binary options:

  • Binary call options, which win if the price of the underlying security at expiration exceeds the strike price.
  • Binary put options, which win if the price of the underlying security at expiration is below the strike price.


 What are Digital Options

Digital Options are the alternate name of Binary Options.


 What is Early Closure

Early Closure is an option provided to an option holder, which allows him to close a trade (open position) earlier than the predefined expiration time.



 What is Expiry Time

Expiry Time is the date when a binary option expires.


► What are Exotic Options

Exotic Options are contracts that are traded on exclusive markets by certain brokers. Binary Options are a simplified version of Exotic Options.


► What is Fundamental Analysis

Fundamental analysis is used to examine and report macroeconomic data such as growth, political developments, and policies of central banks. Fundamentalists are trying to determine if the market price of an asset is undervalued or overvalued related to its true value.


► What are In-the-Money Options

In-the-money options are binary options contracts whose current price is above the strike price. If a binary options contract is in-the-money when it expires, then a predefined profit is gained by its holder.


► What is Over-the-Counter (OTC)

OTC contracts are financial instruments that are sold directly between two parties.


► What are Out-of-the-Money Options

Out-of-the-money options are binary options contracts whose current price is below the strike price. If a binary options contract is out-of-the-money when it expires, then its holder suffers a loss.


► What is Payout Rate

The Payout Rate is the rate of return of a binary option contract when it expires in-the-money. Typically, the binary options payout rate is between 70% and 85%.


► What is Refund Rate

Refund is the amount refunded to the investor if a binary option doesn’t expire in-the-money.”


► What is Strike Price

The Strike Price of a binary option contract is the price at which the contract for an asset will be exercised.


► What is Technical Analysis

Technical analysis is a set of tools and techniques used to analyze the price trend of a financial asset. Technical Analysis can be used in a wide time frame, from intraday to several years. The observation of past price patterns may indicate a profitable trade but also the best time to buy or sell it. 


► What is Touch / One Touch Option

One-Touch Option is a Binary Option Type which allows a profit to be realized if the underlying security touches a predetermined price level before the contract expires.



Read More on Binary Value: » Trading Tips | » Options Platforms | » Trading Features | » Trading Links | » Rating Formula v.3.5 

» Getting Started with Binary Options | » Binary Options Signals | » Binary Options Strategies


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