Binary options glossary terms and definitions
This is a binary trading option that allows a trader to speculate the movement range of an asset over a predetermined time. An online Forex or Binary Options company that acts as source for traders to trade online. TradersAsset aims to review and present the best Binary Options and Forex brokers to our traders. This is a contract whereby the buyer can purchase the underlying commodity at the strike price at any time up to the expiration time. This refers to raw material such as gold and silver, natural resources such as oil and gas, or primary agricultural products such as coffee, cocoa or even livestock.
This is the rate or price of a given asset. Current rates may be delayed from that of the actual market by at least fifteen minutes, depending on the online broker you use. This usually has an expiry time ranging from two days to a week.
Double No Touch Options: A popular tool in Forex trading, this refers to a trading instrument whereby a trader can predict two specific levels that an asset must move in-between in value to generate a payout. If the chosen asset value beyond these two specified points the option automatically expires. This refers to the ability to close an open position so that an option will immediately expire. An option contract consisting of attributes not usually found in most traditional contracts, which are now available to the general public in a simplified form — as binary options.
The time and date at which an option or trade expires. The result of a trade is determined at this point. A method of quantitative and qualitative analysis used by traders to determine which macroeconomic, and possibly company specific factors, should be taken into consideration when analyzing the possible behavior of a security or an asset.
A type contract that agrees to buy or sell a certain asset or security at a given point in the future. Call options have positive deltas, while put options have negative deltas.
When positive delta options and negative delta options offset each other to produce a position which neither gains nor decreases in value as the underlying stock moves slightly up or down.
A financial instrument whose value is derived in part from the value and characteristics of another financial instrument. Examples of derivatives are options and futures. To invoke the right granted under the terms of a listed options contract.
The holder is the one who exercises. Call holders exercise to buy the underlying security, while put holders exercise to sell the underlying security. The price at which the option holder may buy or sell the underlying security, as defined in the terms of his option contract. A physical or electronic document that has intrinsic monetary value or transfers value. For example, cash, shares, futures, options and precious metals are financial instruments.
This is the amount needed as available trading resources in your account in order to open a position. A put option that has a strike price higher than the underlying future price, or a call option with a strike price lower than the underlying futures price.
The value of an option if it were to expire immediately with the underlying stock at its current price. Prior to expiration, the option will have a variable value based on how close it is to the strike price. At expiration, a binary option contract is settled and determined to be in, at, or out of the money. The settlement value factors in the floor and ceiling levels of spreads to decide what the profit or loss will be for that spread contract. Binary options must have a settlement value of either 0 or Spreads must have a settlement value no lower than their floor level and no higher than their ceiling level.
The strike price is the price level you think the market will be above or below at expiration. If you think the market price expiration value will be above the strike, you buy the option. If you think the market will be at or below the strike price, you sell the option. The market's price at expiration is compared to the strike price to determine whether your binary option has settled in, at, or out of the money. In the case of economic events contracts, the publisher of the expiration value.
The maximum aggregate position that any person can hold or control in any particular contract class. These are sometimes needed to prevent mistakes. The amount the market price must move for the price to move up or down one tick in value. Many markets have fractional tick sizes. For example, a tick size of 0.
Other markets have more complicated tick values, dating back to older pricing traditions, such as bushels and ounces. Sometimes tick size and tick value are used interchangeably, especially when both values are one, as in the case of Nadex contracts. On Nadex, trading days start the previous evening and continue through the full trading day that follows it. Trading days always start at 6: They continue without interruption until 5: The times of day during which the contract will be open for trading on the exchange.
Most Nadex contracts are open 23 hours a day, 6 days a week.