Binary Options Terminology Explained for Beginners

If you want to invest in binary options, you’ll most likely encounter many terms which do not seem familiar. That’s why we’ve assembled this material so you will be able to understand better each of them.

The most important terms you should know

Put option – it is an agreement between two parties (a buyer and a seller) that gives the person who buys the put the right to sell a specific financial instrument at a specific price and time. More simply put, it is bought by a trader who expects the price to fall in value before the option will expire.

binary options

Source: https://www.quora.com

Call option – it is an agreement between two parties that gives the person who buys the call to buy a specific financial instrument at a specific price and time. Basically, it is bought by a trader who expects the price to rise in value before the option will expire.

Underlying instrument – an asset upon which an option is structured. Examples: stocks, currency pairs, commodities etc.

Market price – the current price of an underlying instrument.

Expiry level – the price at which the option is located when it expires.

Early closure – The ability to close an option before expiration. This is not offered by all the brokers and it might have some commissions attached to it.

Strike price – the price accepted at the placement of the option which will be used to determine at the expiry if you are in the money of out of money.

In the money – It generally refers to a situation when the market price is above the strike price, for a call option and below the strike price for a put option.

Out of money – It generally refers to a situation when the market price is above the strike price, for a put option and below the strike price for a call option.

With that being said, the terms above are the ones we consider you should know when trading binary options. Hope you found it useful. Also, we’ll do a part two in the future, with more advanced terms.

Meta description: Find out what are the most important terms related to binary options. See what each of them mean, so you can understand better the process of trading binary options.

15 Responses to “Binary Options Terminology Explained for Beginners”

  1. I was curious if you ever thought of changing the layout of your site?
    Its very well written; I love what youve got to
    say. But maybe you could a little more in the way of content so people could connect with it better.
    Youve got an awful lot of text for only having one or 2 pictures.

    Maybe you could space it out better?

  2. I’ll immediately seize your rss feed as I can not in finding your e-mail
    subscription link or newsletter service. Do
    you’ve any? Please let me recognise in order that I could subscribe.
    Thanks.

  3. Hello everyone feel free to reach out to Mrs Patricia Morgan on (patriciamorgan984@gmail.com ) if you need help or guidance on how to recover your lost fund using good strategy and how profitable trades is been done. And also if you want to recover your lost funds using his masterclass strategy She can help you. I’m earning $10,500 weekly using his masterclass.. you can also reach him out on whats-app +1631 633 3388.

  4. Thank you for every other wonderful article. The place
    else may anyone get that type of information in such an ideal approach of writing?
    I have a presentation subsequent week, and I am at the search for such
    info.

  5. Have you ever considered publishing an ebook or guest authoring on other sites?
    I have a blog based upon on the same topics you discuss and would really like to have you
    share some stories/information. I know my visitors would appreciate your work.

    If you are even remotely interested, feel free to send me an e-mail.

  6. I know this if off topic but I’m looking into starting my
    own blog and was wondering what all is needed to get set up?
    I’m assuming having a blog like yours would cost a pretty
    penny? I’m not very internet smart so I’m not 100% certain. Any tips or advice would be greatly appreciated.
    Appreciate it

  7. I was curious if you ever considered changing the page layout of your blog?
    Its very well written; I love what youve got to say.
    But maybe you could a little more in the way of content so people could connect with
    it better. Youve got an awful lot of text for
    only having 1 or 2 pictures. Maybe you could space it out better?

  8. Thanks , I’ve just been searching for information approximately this topic for a long time and
    yours is the greatest I have came upon till now. However, what concerning the conclusion? Are you positive about the source?

Leave a Comment

Binary Options Zone Copyright © 2019