Glossary

Here you will find definitions to common terms used in the trading of Binary Options.

Binary Option: A type of option where the payoff is either some fixed amount of some asset or nothing at all.

Binary Option Broker:  An individual or party that arranges binary option trades, either call options or put options, on underlying assets.

Broker Rebate:  At times, Binary Option Brokers offer a rebate to the investor on trades that the investor loses his investment.  These are typically between5% and 15%.

Binary Call Option:  A contract between two parties, the buyer and the seller. The buyer of the binary call option will collect on his investment if the price of the asset is above the original price when the agreed expiry time is reached.

Investor:   A party that makes an investment into one or more categories of assets such as put and call options, etc. — with the objective of making a profit.

In The Money:  A call option is in the money when the strike price is below the price at expiry. A put option is in the money when the strike price is above the price at expiry.

Option:  An instrument that conveys the right, but not the obligation, to engage in a future transaction (for example, on some underlying security or on a parcel of real property), or in a futures contract.

Option Expiry:  the date on which the contract expires.

Out Of The Money:  A call option is out of money when the strike price is above the price at expiry. A put option is out of the money when the strike price is below the price at expiry.

Binary Put Option:   A contract between two parties, the buyer and the seller. The buyer of the binary putl option will collect on his investment if the price of the asset is below the original price when the agreed expiry time is reached.

Strike Price: The fixed price at which the owner of an option can purchase or sell the underlying asset.

Underlying Asset:  The asset that the option trade is based upon.

 

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