Home » Binary Options Glossary Of Terms

Glossary Of Binary Options Terms

Asset/Underlying Asset

The underlying resource used in a binary contract. This is normally an market Index, currency pair, commodity or individual stock.

At-the-Money

This term is used to describe a binary option contract that is currently trading exactly at the target price.

Binary/ Digital Options

An Option contract that provide a fixed payout and fixed loss at expiry. This is determined at the point of purchase.

Call Option

An option type where the trader realizes a profit if the target price is above the entry level at the point of expiry.

Current Rate

The current price level of an underlying asset.

Expiry Rate

The price level of an underlying asset when the option contract expires. This determines whether the option finishes in-the-money, out-of-the-money or at-the-money.

Expiry Time / Date

The time and date of when an option contract expires.

Investment Amount

The amount of money invested in either a Put or Call option; the stake.

In-the-Money

This term is used to describe an option that is profitable. For example in the case of a Call Option the current price of the underlying asset would be higher than the original price when the option was purchased.

Option

A form of financial derivative. The contract offers the buyer the right to buy (Call) or sell (Put) an underlying asset at an agreed price (the strike price) during set time period or on a specific date.

Payout

The profit realized when a contract expires in-the-money. In binary options the payout is generally between 75% and 81%.

Put Option

An option type where the trader realises a profit if the target price is below the entry level at the point of expiry.

Strike / Exercise Price

This refers to the price level in the market that an option can be exercised. For Call/ Put options this is the level at the time of entry in the market. For Touch options it is the level that an asset value must touch to be considered in-the-money.

Touch/ One Touch Option

An option type where a profit is realised if the underlying asset touches or surpasses a predetermined level during the lifetime of the option contract.