Glossary

For a quick and robust introduction to binary options trading, we’ve listed for you all of binary trading’s adequate terms and phrases. The terminology you’ll find on this page is commonly used across the entire industry and has proven to contribute to the progression of new traders.

A binary Option which expires in a period of 60 seconds, also known as On Demand.

An Option that can be exercised at any time during its lifespan. These Options, unlike European Options (i.e. binary or digital) do not need to wait until maturity to be exercised.

The price at which an investor can buy an asset in the financial markets. The asking price is a part of the formula that is used to calculate the expiry level of an asset.

Underlying assets are used in derivative trading to describe an asset whose price can be derived from a different asset. Derivatives are exchanged for cash and therefore do not require an exchange of the physical asset. Underlying assets refer to a contract based on the price of these assets but without requiring its exchange or even ownership.

Commodities – Gold, Silver, Oil, etc.
Indices – NASDAQ, Dow Jones, DAX 30, etc.
Stocks – Amazon.com Inc, Facebook Inc, Google, etc.
Currencies – USD/CAD, EUR/GBP, AUD/USD, etc.

When the current price of the underlying asset is the same as when the Option was purchased.

Either the asset’s market price is still trading or has closed and is profitable.

Either the asset’s market price is still trading or has closed and is not profitable.

Options that will payout a fixed amount, if the asset on which the Option is based reaches the trader’s selected ‘direction’ at the expiry time.

When a trader predicts that the price of an asset on expiry will be above the strike price of the Option.

When a trader predicts that a price of an asset on expiry will be below the strike price of the Option.

A binary option in which you can decide whether the asset’s market price will expire above or below its current market price.

A binary option in which you predetermine a value (price) the asset has to reach before expiring.

The Range instrument allows you to decide whether the option will expire within or without the given price range.

Each asset has its own trading hours and/or trading days; in addition to holidays.

The current market price for an underlying asset. Once the Binary Option has been purchased the price at which it was executed becomes the ‘strike price’. Current prices are determined objectively by real-time data providers such as Reuters.

The current market price for an underlying asset when an Option is executed

The price of the underlying asset when the Option expires. This price determines whether the Option finishes At-The-Money, In-The-Money or Out-Of-The-Money.

The time when the position will be closed and it becomes known whether the Binary Option trade is successful or not. The expiry time is an important and decisive factor in the outcome of the Binary Option. The choice of expiry time for a trader may vary. It is important for a trader to understand the timeframe with which they are planning to trade. In Binary Options, the expiry time is a critical factor in the success of a trade.

A method of evaluating a security by utilizing economic, financial and additional factors. The goal is to analyze all the factors that can affect a security, such as overall economic conditions, industrial environment and company-specific factors.

A method of evaluating an asset by studying statistical data related to its historical performance, such as past prices and volume. Charts and graphs, in addition to other research tools, are utilized to identify any possible patterns that may be indicators of future activity.

Refers to the movement of a price over a period of time; as the time period of a price movement extends in a continuous direction, it reflects a hype- a trend. Recognition of a trend allows traders to make informed decisions based on the probability of the future direction of assets.

An index represents a basket of stocks. For more information about the indices traded on the Opteck platform see “Asset Index.”

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