Binary options lingo

A type of option that can be exercised any time during its lifetime. These differ from European options which can only be exercised only at maturity. Most binary options are European options. This is the price a trader can buy an asset and is often used in conjunction with other variables to to calculate the expiry level of an asset.

This occurs when the price of the underlying asset is the same as is was when the option was purchased. In most cases this will result in the traders investment being returned in full. Also known as Digital options and All-or-nothing options, these are a type of option which usually pay a fixed amount or nothing at all, depending on whether the option in profitable in-the-money or unprofitable out-of-the-money.

This fixed return is set at the onset on the contract. Binary options are a rapidly growing new type of option. Traders optimistic about an asset would purchase a call. It is where the trader sets the target price of an asset at the point of the expiry of the option to be above the entry rate. A type of option that can only be exercised when it reaches the end of its life. These differ from American options which be exercised at any time during its lifetime.

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This is the price of the underlying asset when the option expires and determines whether an option is profitbale in-the-money or unprofitable out-of-the-money. Brokers calculate this based on data from a assigned data provder such as Thomspn Reuters.

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This is the discipline in finance of predicting the movement of instrument prices through the fundamentals of its business such as financial health, competitive advantage, management, etc, and current economic factors as opposed to technical anaylsis which relies on past sentiment. These are the basic types of BO instruments.

Traders simply decide whether the price of the underlying asset will be above or below the target price at the point of expiry.

A high option in is in-the-money if the underlying asset expires at a higher level than the option target price and out-of-the-money if it expires lower than the target price. The opposite is true for low options. A low option is in-the-money if the underlying asset expires at a lower level than the option target price. An option on a Boundary instrument typically offering a set in-the-money return if the underlying asset expires within a range formed by the upper and lower target values.

This represents the current value of the underlying asset based on a feed provided by the assigned Data Provider usually Thompson Reuters. A type of option which is profitable if it does not touch a target price at any time during its lifetime. These are derivative financial instruments specifying that a contract exists between two parties for a future transaction on an asset at a reference price, knows as the strike price.

The option buyer has the right, but not the obligation, to engage in that transaction; the option seller incurs the corresponding obligation to fulfill the transaction. An option on a Boundary Instrument typically offering a set in-the-money return if the underlying asset outside a range formed by the upper and lower target values.

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Traders pessimistic about an asset would purchase a put option. The trader would be in-the-money if the asset drops below the entry rate. Within BO trading, most brokers will offer a refund for out-of-the-money transactions. The amount returned to the investor in the option expires in-the-money. Returns differ from broker to broker and asset to asset. This is the discipline in finance of predicting the movement of instrument prices through analysis such as historical data, prices and volumes, and trends, as opposed to fundamental analysis which relies on the present fundamental state of a company and economy.

If it does not, the investment is out-of-the-money. A resource with has a value. When it comes to binary option trading, these assets usually fall into 4 categories:. Designed by Elegant Themes Powered by WordPress. Binary Options Brokers OptionRally AnyOption TradeRush How To Trade Binary Options Binary Trading News.

This allows the trader to close an open position so that the option will immediately expire.

The current market price for an underlying asset at the time the option is executed. This is the time and date at which an option expires.

When it comes to binary option trading, these assets usually fall into 4 categories: Binary Options Brokers How To Trade Binary Options Binary Trading Lingo Binary Trading News Contact Us. AnyOption 24Option StockPair GTOptions eToro Sunbird FX.

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