Binary Options Dictionary
In this dictionary, you will find the most common terms used in binary trading. Binary trading is quite simple; this dictionary contains the basics of trading.
Binary options – This are options having only two possible results. The two outcomes are as follows, they can either be expired “in the money” and bring forth profit or they can expire “out of the money” and hence result in a loss. Binary options also go by the term “two-way option” or “digital option”.
Boundary Options – This is a special category of binary options. A binary option trader has to predict if the value of the asset will be maintained between the pre-defined levels or they will expire out of the boundaries.
Call option- A call option is a binary option that will lead to profits if the asset value will be higher that its value during purchase. Call options are purchased when binary option traders predict a rise in their prices.
Digital options- Options that have only two possible results. They are commonly referred as “binary options”
High/Low options- A standard type of binary options, traders predict if the value of the asset will be increasing or decreasing with comparison to their purchase value. They are divided into two categories, Put Options and Call options.
In the money- When binary options expire” in the money”, it means that it has generated some profits for the binary trader.
Option expiry- This is the deadline date of the binary option. It is the point of expiry of an option and the asset value is compared to the value during the time of purchase of the option.
Option refund- This is sum of cash given back to the trader in the event that the option has expired in the money.
Out of the money- When an event where an option finishes “out of the money”, it implies that the option has generated losses for the trader.
Put option- A special category of binary option. It generates profits when the value of the asset is lower at the expiry time compared to when it was purchased. Put options are purchased at times where binary options trader predicts a fall in the price of a binary option.
Touch options – A special category of binary options. Binary options traders must predict on whether the value of the asset will reach a certain value by the time they expire. The touch options can either be “Touch Up” or “Touch Down” options which depend on whether the touch value will be above or below the prevailing market value. In either cases, a binary trader can purchase a “Touch” or “No touch” option.