Ask Price – The price at which a seller is offering to sell an option.
Asset – An underlying financial instrument such as a stock or index that is used in determining the strike price of an option contract.
At-the-Money – The obtaining of either a natural gain or natural loss due to the asset value of the option at expiry being approximately the same value that it was at the time of its purchase.
Binary Options – Options that can allow traders to earn a specific fixed amount should they accurately predict whether or not the value of the underlying asset will be higher or lower than its strike price at the time of the options expiration.
Call Option – An option choice whereby the trader will realize a profit if the underlying asset has a higher value at its expiry that it had at the time of purchase.
Current Price – The price of an option contract that is obtained in as close to real time as possible. (When trading in binary options, the current price is typically delayed by at least 15 minutes.)
Expiry Price – The current price of an underlying asset when the option contract on that particular asset expires. When taking part in binary options trading, the expiry price refers to the basis upon which the option finishes either in-the-money or out-of-the-money.
Fundamental Analysis – A type of analyzing potential movements of investments by examining macroeconomic data such as the economic environment, movements of the central bank, politics, and/or demographic events. This type of analysis has a bent that assets may be temporarily mispriced, but that they will at some point reach their correct price.
Investment Amount – The amount of money that a trader invests in an option.
In-the-Money – The position in which an options trader realizes a profit on the trade.
Out-of-the-Money – The position in which an options trader realizes a loss on the trade.
Payout – The profit that is realized when an option contract expires in-the-money. With regard to binary options, payout is typically between 75 and 81 percent.
Put Option – A type of option in which the holder may sell assets at an agreed upon price either on or before a specific date.
Strike Price – The price at which the contract option for an asset may be realized. When trading in binary options, this is the price-at-sale of the underlying asset. This is also the price that is used in determining if an options contract will expire in-the-money or out-of-the-money.
Technical Analysis – A way of analyzing the potential movements of investments by examining historical data in which to predict future trends in the price of a particular asset. This type of analysis has a bent that all aspects of a particular asset’s price are built into the asset’s market price, thereby allowing a trader to determine which direction the asset will take.
Time of Expiration – The date and the time that an option contract will expire. This is the same as the expiry time of the option.
Trader – An investor who makes purchases and sales of investments.
