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Binary Option Trading Glossary

  • Asset

    Asset or underlying asset is an instrument offered by binary option brokers for trading. Examples of underlying assets include EURUSD, GBPUSD, AUDUSD, USDJPY, XAUDUSD, XAGUSD, Crude Oil, Natural Gas etc.

  • At The Money

    If the closing price andstriking (purchasing) price of a binary option contract are same then we say that the option is expired at the money. In this case there will be no profit and no loss i.e. the balance will remain the same as it was before the trade.

  • Bearish Market

    Bearish market is a market situation in which price is generally in downtrend and sellers are controlling the price.

  • Bullish Market

    Bullish market is a market situation in which price is generally in uptrend and buyers are controlling the price.

  • Binary Options

    Binary options or digital options are contracts having two potential outcomes i.e. either a fixed, pre-determined profit or a fixed loss (Equal to, or less than, the invested amount). That’s why they are binary (binary means “two”) in nature. Each binary option contract has a predefined return, usually in percentage. Binary options expire after a fixed (pre-defined) time.

  • Boundary Instrument

    Boundary instruments (also referred as range instruments) allow traders to predict whether the price of an asset/security will close within a specific range or not at the time of expiry of the contract. The range is given in the form of higher and lower boundary prices, which define the range.

  • Broker

    Broker is an intermediary party between a trader and liquidity providers in binary option trading. For example, OptionBanque.Com is a binary option broker.

  • Call

    Traders take a call position if they think that the price of an asset will close higher at their chosen expiry time,as compared to the “strike price” at which they take the position(please see below for definition of “strike price”).Such a position is taken, with a predefined rate of return.

  • Commodity

    It is a type of underlying asset that may be traded at any binary option broker. Commodities have physical existence. Examples of commodities include gold, silver, gas, crude oil, platinum, palladium etc.

  • Currency

    Currency is another type of underlying asset that can be traded at any binary option broker. Currencies are traded in pairs, with the pair price value based on their conversion rates. Examples of currencies include EURUSD (Euro and US Dollar), GBPUSD (British Pound and US Dollar), AUDUSD (Australian Dollar and US Dollar), USDJPY (US Dollar and Japanese Yen), USDCAD(US Dollar and Canadian Dollar) etc.

  • Current Price

    Current price is the real-time price of an underlying asset offered by data providers. It is however pertinent to mention here that nowadays some binary brokers offer delayed quotes, they even mention it in their terms & conditions.

  • Deposit

    In order to trade binary options at any binary option broker you need to add funds which are called deposits. At optionbanque.com, the minimum first deposit is $100.

  • Early Close

    Early Close option allows binary traders to close a contract even before its actual expiry time. Optionbanque.com is one of the few binary brokers that offer this facility.

  • Expiry Time

    It is the time when a binary option contract is closed and settled. If the end result follows the prediction/estimation of binary trader at the time of expiry time then the trader makes a profit on the trade and receives a predefined positive return, which is known at the time of trade initiation.

  • High/Low

    While trading the High/Low binary options, traders predict that if the price will close higher or lower than the given price of broker. OptionBanque.Com offers High/Low option trading with impressive rate of return. Its also called a Digital option.

  • Inbound Option

    A binary option contact is termed as an inbound option if it expires within the range of given high/low levels.In bound means, inside the bounds/boundaries. Inbound options yield predefined return, on trades that estimate the price to stay within the range/bounds/ boundaries.

  • Index Option

    Index option is a type of option that allows trading in indices as the underlying asset.Index options allow binary trading in indices such as Dow Jones, S&P500, NASDAQ, Nikkei, FTSE-100 etc.  OptionBanque.Com offers trading in a wide range of index options.

  • Instrument

    An instrument may include any financial instrument or underlying asset being offered by a binary option broker for option trading. Examples of instruments include currencies, commodities, stocks, indices, bonds, crypto-currencies etc.

  • In the Money

    In the money refers to a scenario when the prediction/estimation of a binary trader meets the actual outcome at expiry. For example, a trader entered a call position and the contract expired above the entry price of trader.

  • Investment

    It is the invested amount in any binary option contract. Typically a binary option trader may invest $1 to $1000 on a single binary option contract. Minimum and maximum amounts of investment vary from broker to broker, depending on their access to liquidity providers. Its also called the “premium” of an option sometimes.

  • No Touch

    No touch is a binary option trading scenario where the price of an asset doesn’t reach the given target price to be touched. Hence the “touch option” expires out of money. Vice Versa, if the option selected is a no-touch option, then it expires in the money.

  • One-Touch

    One-Touch or Touch is a type of binary option contract in which a trader predicts if the price of an asset will touch a specific target or not. If the target is touched, then trader is in the money and vice versa.

  • Outbound Option

    White trading range binary option contracts, if an option expires outside the given high/low price of broker then it is known as outbound option. When taking positions in range options, a trader can choose whether they expect the asset price to be inside/outside the pre-defined range at the time of option expiry.

  • Out of the Money

    Out of the money scenario refers to binary option contracts that expire at no gain, hence a trader losing money which was invested on the contract. For example, if a binary trader enters into a call trade but the price expires lower as compared to the entry price then the contract will result into out of the money scenario for a trader. The total loss on an out of the money option can be less than or equal to, the invested amount.

  • Put

    Binary option traders enter a put trade if they believe that the price of an asset will expire at a lower price than the entry level, hence yielding a predefined return. Traders place put or call trades based on their analysis ofthe expected future price direction of underlying assets.

  • Refund

    A portion or full amount is refunded by the broker if a binary option contract expires “At the Money” as explained above. It is pertinent that some brokers refund 5%-15% even if an option expires “Out of the Money.”

  • Return

    This is the yield you receive if an option expires in the money. Return is predefined and measured in percentage for example 80%, 100%, 150%. If a trader invests $100 and return is 80% then he will make a profit of $80 in case the option expires “In the Money.”

  • Stock

    Stock is a type of underlying asset offered by a binary option broker for trading. Stocks refer to stocks or shares of companies such as Apple, Facebook, Microsoft, Google etc. You can trade a wide range of stocks at optionbanque.com

  • Strike Price

    Strike price is also called purchasing price. It refers to the price level at which an option contract is purchased. For example, if a trader enters a call trade in EURUSD at 1.1250 then 1.1250 will be the strike price. The profit/loss on an option trade compares this strike price to the price of the asset at the time of option expiry i.e. the “expiration price”.

  • Withdrawal

    If you need cash or want your funds back for any other reason then you can request a withdrawal of money through the client/cashier section of the binary option broker. The process of withdrawal usually takes 1-6 business days depending on the payment method used for withdrawal.

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