Glossary Of Terms

glossary

Glossary of Terms

Asset

The asset is the underlying trading resources whose price movement is speculated on when placing a binary options contract. This will usually be a Forex pair, Stock Index, commodity or stock price.

At the Money

This is used for describing an option contract where asset price trades at precisely the level of the target price.

Binary Options / Digital Options

An Options that gives both a fixed payout loss which is set by the broker at the point of purchasing the contract.

Broker

A binary options broker provides the online trading platform to support the purchase and execution of binary options contracts.

Call Option

A type of option contract where a profit is realized if the expiry price level is above the entry price when the contract expires.

Expiry Rate

As assets price level when the option contract expires. The expiry rate determines whether the contract finishes ‘in the money’ or ‘out of the money.’

Expiry Time

Used to describe the time and date of when a purchased option contract is set to expire.

In the Money

This term is used to describe an option contract that expires for a profit. If you had placed a ‘Call’ Option that expired above the ‘Strike’ price then the option would be deemed to have finished ‘in the money’.

Option

A contract or trade type which offers the buyer of the contract the right to buy or sell a financial asset at a prior agreed price over a preset time period.

Out of the Money

The term that is used to describe an option that expires for a loss. If you had placed a ‘Put’ Option that expired above the ‘Strike’ price then the option would be deemed to have finished ‘out of  the money’.

Payout

The level of profit earned for an ‘in-the-money’ option expiry.

Put Option

A type of option contract where a profit is realized if the expiry price level is below the entry price when the contract expires.

Rebate

The payout from a broker for options that expire ‘out of the money.’ This facility is offered by some brokers on ‘out of the money’ expiry.

Stake

The amount of money placed on the outcome of an option expiry.

Strike Price

The price level of an asset when the option contract is placed. If placing a Higher/Lower option this will be the asset price at the time the option is purchased. For Boundary or Touch options this is the asset price that must be met (or not) for the option to expire ‘in the money.’

Touch or No Touch Option

A type of option offered by brokers where an asset must either ‘touch’ or ‘not touch’ the Strike price prior to expiry in order for the asset to be considered ‘in the money.’