American option – an option that can be exercised before expiration
Ask price – the price at which binary options trade are made. It is the price at which the dealer sells an option to the trader.
Asset – an underlying financial instrument used in the binary options market
Asset Value – the price of an asset at any time
Asset class – a category of an asset. There are 4 asset classes: currencies, commodities, indices, and stocks.
Bearish – (adj.) expecting or characterized by a fall in prices. The opposite is bullish.
Bid – the price at which an asset is sold to the trader
Binary options – options whose payout is a fixed amount of money if the trader’s prediction is correct. If it is not correct the trader losses his/her investment
Bullish – (adj.) expecting or characterized by a rise in prices. The opposite is bearish.
Call option – one of the two binary options. If the trader thinks that the price of an asset will increase, he should invest his money in the call option.
Closing – the process of ending the trade which results in a profit or loss.
Closing price – the final price at which the trader made a transaction
Commodities – raw materials with economic value. They can be soft (grown goods e.g. coffee, sugar, wheat) or hard (extracted goods e.g. gold, coal, crude oil).
Currency pair – two currencies with a Forex rate.
Digital options – another name for binary options
European option – an option that can be exercised only upon its expiration
Expiry – the time/date at which the trader’s contract expires
Expiry rate – the price of the asset when the contract expires
Fixed Return Options (FRO) – another name for binary options
Foreign exchange (Forex or FX) – the process of buying one currency while selling another
Hedge (Hedging) – the trading strategy which is used to reduce potential risks and to protect an existing position
In-the-money – The binary contract that has ended in profit
Index – A compilation of several stock prices into a single number
One touch option – An option with which the trader makes a profit if the asset only touches the strike price before expiry
Out-of-the-money – The binary contract with which the trader experiences loss
Payout – the profit which the trader receives for the successful trade
Put option – one of the two binary options. If the trader thinks that the price of an asset will decrease, he should
invest his money in the put option.
Stock – a share of a company traded in the binary options market
Strike price – the price at which the trade is exercised
Touch option – an option where trader predicts whether the asset will touch the strike price
Underlying asset – the security traded in the binary options market