Glossary

This glossary provides definitions of different technical terms that are used in binary options trading. If you have any term what is not listed below, please write us through our contact us form and we will add the definition of this term for you.

Term Definition
Asset

A resource that has an economical value which is owned by a company organization a corporation or an individual.

 

Asset Value

Term used for the result derived from the division of the net market value of a corporation or company's assets by the total number of its assets and liabilities.

 

At The Money

This term used to show the position where the option is in when it expires, which is neither “in-the-money” nor “out-of-the-money,” but it is at the same value in which it was purchased.

Bearish Market

This is the term used when the value of a certain financial market or stock is continually going down.

 

Binary Option

The term used to show that a trader has only two options, win or lose. Traders have to predict if the value of a certain asset would increase or decrease. Then, they just have to choose between “Call” (increase) and “Put” (decrease). If their prediction is right, they will get profits in the trade; if they’re wrong, they will lose money in the trade.

 

 

 

Bonus

A value that is given by your chosen broker which will be put in your outstanding balance. Bonuses will depend on the balance of your account. It is a privilege given by the broker to the clients and usually needs certain requirements from the clients.

 

Boundary Instrument

An instrument that lets the trader to decide whether the price of the asset would be inside or outside a specified range when the option expires. The range is quantified by higher and lower target price limits.

 

Broker

An individual or a company that serves as the mediator between a trader and the available options that the trader can work on. IQ Option 24 Option and Opteck are some of the most famous binary options brokers today.

 

Bullish Market

Opposite to bearish market this is the term used when the value of a certain financial market or stock is continually going up. 

Call Option

One of the options in binary trading. This signifies that you predict that a certain asset’s value will go up in a certain timeframe.

 

 

Commodities

One of the underlying assets. Commodities include physical items like gold silver and wheat that are widely affected by economy.

 

Currencies

One of the underlying assets. Currencies include trading currency pairs like USD/GBP, USD/EUR, and USD/CAD.

 

Current Price - Market Price

As the name suggests, it is the up-to-date price of a certain underlying asset. This information is being transmitted by a data provider, which made real-time price possible.

 

Deposit

The amount of money you need to fund your account and start trading.

 

Early Closure

The term Early Closure used when a trader chose to close an option and instantly expire it while it also finishes the contract.

 

Expiration/Expiry Time

This indicates the exact time and date when your chosen option for a specific trade will expire. Common expiry time examples are as fast as 60 seconds and as long as one month.

 

Expiry Level

This term is similar to ?expiry rate? and ?expiry price? which is defined as the price or rate at which your asset expires.

 

Forex

Forex is a shortened term foreign exchange. This is a trading act that involves two currencies which are exchanged or converted from one to the other.

 

Fundamental Analysis

This is explained as the method of evaluating a security which involves attempting to measure its basic value through assessing related financial, economic, and other quantitative and qualitative factors.

 

Hedging (Fencing)

This is a trading act that indicates buying both a put and a call on the same financial instrument. This is done with strike prices that allow both a put and a call to be in the money at the same time.

 

High/Low Option - Call/Put Option

This trading option allows you to predict whether your underlying asset price upon expiring will be higher or lower than the target price.

 

In The Money

This is a term that refers to the scenario where a purchased option achieves a gain and the trader makes a profit. This happens when you placed a high option and the expiry level is above the target rate.

 

Inbound Option

It refers to the event when the underlying asset expires within the higher and lower limits of the target prices.

 

Index Binary

This includes assets such as Nasdaq-100 Dow Jones, etc. These are the options which the underlying assets are that of an index.

 

Indices

Index or indices are representatives of a broad portion of a given market. It is like a list of securities representing a particular segment of the financial market.

 

Investment Amount

The amount of money that the trader inputs when making a purchase in the system.

 

No Touch

The term used when a certain target value set by the broker was NOT reached by the value of the certain asset during a set timeframe.

 

One-Touch

The term used when a certain target value set by the broker was reached by the value of the certain asset during a set timeframe.

 

Out of The Money

This is the term used when the purchase of the trader has ended to no-gain after the set time frame has expired.

 

Outbound Option

This term refers to the placing of range instrument when the asset expires outside the higher and lower limits of the target prices.

 

Payout

The amount of money that is given to the trader after getting profits from his or her successful trades.

 

Put Option

One of the options in binary trading. This signifies that you predict that a certain asset?s value will go down in a certain timeframe.

 

Range Option

This option depends on the ?floor,? also known as lower value, and ?ceiling,? which is the higher value. Your prediction will be based on whether the value of that asset will be within a boundary of those two values or even outside of them.

 

Refund

A part or the full amount of your investment after your set trade has expired.

 

Return/ Return on Investment (ROI)

This is the profit you will get when your set trade has expired, and the result of trade is positive in your side.

 

Stock

This refers to the stock of a company that can be traded in the financial stock market.

 

Strike Price

This refers to the price of a certain underlying asset when you purchase an option. Meaning, the new price when your option expires will be based on the strike price when you made the purchase.

 

Target Price

As the name suggests, this is the target price of the underlying asset value when you choose boundary options.

 

Technical Analysis

The term used which is the study of traders of the market trends through the use of charts and price action.

 

Trading Hours

Refers to the time when certain assets are available for trade.

 

Underlying Asset

Anything such as a commodity a stock in a company indices or currencies that has a value based on derivatives or market value.

 

Underlying Asset

This term is used to a contract based on the price of the assets but without requiring physical exchange or even ownership.

 

Underlying Asset Types

Types of asset which are linked to a financial category that each asset falls into. These include commodities, forex, indices, and stocks of big companies.

 

Withdrawal

The process when the trader gets his or her money from his or her trading account to his or her banking options.