Binary Options Platform Glossary

What is a binary option trade?

A binary option is a trade on the directional movement of a certain financial asset where there are only two possible outcomes.

  1. The selection made on the movement of an asset moves in the way predicted in a predetermined time frame is a winning selection.
  2. The selection made on the movement of an asset does not move in the way predicted in a predetermined time losing selection.

What can you trade using a binary option?

In binary options there are four main financial assets that are available.

  1. Commodities such as Gold, Silver and Oil
  2. Forex, most major currency pairs such as GBP/USD, JPY/USD, EUR/USD
  3. Stock Market Indices such as The Dow Jones, NASDAQ, FTSE, CAC, DAX
  4. Individual Stocks, such as Microsoft, Apple, GOOG, BP

What are the Trade Types?

  1. Call Option (Up Trade) This is when the selection on the direction of an assets price is for it to go up in price from when the deal strike price. Example Trader predicts gold is going up from the current $1,410 so the trader initiates a call option at $1,410 if the price of gold is above $1,410 by the expiry time it is a winning prediction and is In The Money (ITM)
  2. Put Option (Down Trade) This is when the selection on the direction of an assets price is for it to go down in price from when the deal is struck. Example Trader predicts gold is going down from the $1,410 so the trader initiates a put option at $1,410 if the price of gold is below $1,410 by the expiry time it is a winning prediction and is In The Money (ITM)
  3. Touch Option This is when a trader predicts a price of an asset will touch a predicted price in a predetermined time. Example Trader predicts gold is going to touch from the $1,415 at the moment it is trading at $1,410 so the trader initiates a touch option at $1,410 if the price of gold touches $1,415 at anytime up to the expiry time it is a winning prediction and is In The Money (ITM)
  4. No Touch Option This is when the price of an asset will not touch a predicted price in a predetermined time.
  5. 60 Second Binary Option This is a short term binary option where the trader will predict the price movement of an asset in the next 60 seconds.

What is the Strike Price?

The strike price is price of an asset when a trade is initiated.

Example: Trader predicts gold is going up from $1,410 so the trader initiates a call option at $1,410 in this instance that is the strike price is $1,410.

What is the Expiry Price?

The Expiry price is the exact time and date at which the binary option trade expires, it will then be compared to the strike price to determine if it is In the Money or Out the Money.

What does In The Money Mean?

In The Money or ITM is a term used when a trader has a winning prediction and is due a payout hence the term In The Money.

What does Out The Money Mean?

Out The Money or OTM is a term used when a trader has a losing prediction and is not due a payout hence the term Out The Money.

What does At The Money Mean?

At the Money or ATM Is when the expiry price is the same as the strike price and so the trader is neither right or wrong. When this occurs the traders stake money is returned.

What does Pay-out mean?

The pay-out is what occurs at the expiry of a wining trade at the time of expiry.