Binary Options Glossary

4 September 2012
By
Plus500 - Trade anywhere

Asset
A stock, commodity, index or Forex pair. At optionFair the list of assets include Oil, Gold Google stocks, EUR/USD and many others

  • At-the-money
    If the option expires at exactly the same price the option was purachsed, then it is called at-the-money and the investment amount is returned fully to the investor.

  • Binary Options
    Traded at optionFair, they are an option to buy an asset which has a predetermined payoff over a predetermined period of time

  • Boundary Instrument
    An instrument allowing the customer to decide whether the underlying asset will at expiry be located inside or outside a specified range (formed by a lower and upper target price).

  • Call Option
    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument at a specified price within a specific time period.

  • Current Price
    The last price according to real time data unless otherwise is stated. At optionFair all prices are in real time

  • Exotic Options
    Binary Options are a simplified version of exotic options. Exotic options are more complex than Binary Options and involve different payoff calculations and time periods

  • Expiry Price
    The price of the underlying asset at the time of expiry of the option according to real time data. The expiry price determines whether the option has expired in-the-money or out-of-the-money

  • Expiry Time
    The time and date at which an option expires.

  • High Option
    An option on a High/Low instrument typically offering a 70% return if the underlying asset expires at a higher level than the option target price. At optionFair there is a 15% refund if the underlying asset expires at a lower level than the option target price

  • High/Low Instrument
    An instrument allowing the customer to decide whether the underlying asset will be above or below the target price when the expiry time of the option is reached

  • Inbound Option
    An option on a Boundary instrument offering a fixed return if the underlying asset expires “Inbound” i.e. within the range formed by the upper and lower target values. In the case of the option expiring “Outbound” i.e. outside this range, 15% of the invested amount will typically be refunded by optionFair

    Plus500
  • In-the-money
    A Call Option is In-the-money when the Expiry Price is higher than the option buying price at the Expiry time / A Put Option is In-the-money is when the Expiry Price is lower than the option buying price at the Expiry time

  • Investment Amount
    The amount invested in a specific option.

  • Low Option
    An option on a High/Low instrument typically offering a 70% return if the underlying asset expires at a lower level than the option target price and 15% refund if the underlying asset expires at a higher level than the option target price

  • No Touch Options
    An option on a One Touch instrument typically offering a 70% return if the underlying asset does not reach the target price during the lifetime of the option. Note: Should a No Touch option reach the target price at any time during the lifetime of the option then the option automatically and immediately expires “Out of the money” typically with a 15% refund on the investment amount.

  • Outbound Option
    An option on a Boundary Instrument typically offering a 70% return if the underlying asset expires “Outbound” i.e. outside the range formed by the upper and lower target values. In the case of the option expiring “Inbound” i.e. within this range, 15% of the invested amount will typically be refunded by optionFair

  • Out-of-the-money
    A Call Option is out-of-the-money when the Expiry Level is lower than the option buying price at the Expiry time / A Put option is out-of-the-money when the Expiry Level is higher than the option buying price at the Expiry time

  • Over-the-Counter (OTC)
    Products which are sold directly between two parties. Binary options are available in a limited number of exchanges, but are primarily sold as over-the-counter products online.

  • Payout
    The amount of money recieved when an asset expires ‘in the money’ – usually between 65-85% when trading binary options at optionFair

  • Put Option
    An option that provides the trader with a fixed profit when the underlying asset is lower at the maturity date than the price level it was purchased at.

  • Strike Price
    Also known as Exercise price it is the price at which the contract option for an asset can be exercised.

  • Touch Option
    An option on a One Touch instrument typically offering a 70% return if the underlying asset reaches the target price at any time during the lifetime of the option. (Note – Should a touch option reach the target price at any time during the lifetime of the option then the option automatically and immediately expires “in the money”) . Should the option expire without the target price having been reached then 15% of the investment amount will typically be refunded.

    Tags: , , , , , , , , , , ,

  • Comments are closed.