Binary Options Glossary at HighOption
Familiarize yourself with Binary Trading using our Binary Options Glossary. Dominate the market by understanding the market’s vocabulary.
Understanding binary option terminology is one of the easiest ways to increase your knowledge about the markets. Below is a listing of the most common binary options terms that are in use on HighOption trading platform and in use in the binary options industry.
One of three terms used to describe an option’s current status in terms of its ability to generate profit. At-the-money refers to a situation in which the option’s target price is identical to the underlying asset’s price. If an option expires in this status, the investment amount will be returned.
Binary options involve trading the financial assets used in a specific type of market trading that offers a fixed payout for the correct prediction of simple yes/no propositions. For example, a typical binary option would ask if the underlying asset, such as Gold, would rise or fall in value and offer an 85% return for a correct prediction.
Boundary instrument is a binary options trading instrument in which a trader is required to predict if the underlying asset will reach a value that is within or out of a specified range of values when the binary option expires.
Expiry level is the value of the underlying asset at time when the binary option expires.
Expiry time is the specific predetermined hour and date when the time allotted for estimating the direction of an assets market value closes.
High Option is an option on a High/Low instrument offering a fixed return of up to 85% return if the underlying asset expires at a higher level than the option target price.
High/Low Instrument is a binary options trading instrument in which a trader must predict if the underlying asset will reach a value that is above or below the strike price when the option expires.
In-the-Money term is one of three terms used to describe an option’s current status in terms of its ability to generate profit. In-the-Money refers to a situation in which the underlying asset’s value will generate profit. For example, when selecting “high” on the high/low instrument, the option will be In-the-Money if the underlying asset’s price is above the target price.
Investment amount is the amount of capital invested in a single binary option position.
Market price in binary options trading is the current value of an underlying asset.
No Touch Option
No Touch Option is an option on a One Touch instrument typically offering a return up to 70% if the underlying asset does not reach the target price during the lifetime of the option. Note: Should a No Touch option reach the target price at any time during the lifetime of the option then the option automatically and immediately expires Out of the money
One Touch Instrument
One Touch Instrument is a binary options trading instrument in which a trader must predict if the underlying asset will touch a specific value prior to expiration or not.
Out-of-the-Money is one of three terms used to describe an option’s current status in terms of its ability to generate profit. Out-of-the-Money refers to a situation in which the underlying asset’s value is such that it will not generate profit. For example, when selecting “high” on the high/low instrument, the option will be Out-of-the-Money if the underlying asset’s price is below the target price.
Return on Investment (ROI)
Return on Investment (ROI), or briefly Return, is the amount given back to the investor once an option expires in-the-money. For example, if the trader invests €1,000 in an option that offers an 81% return, they will receive €1,810 in return (€810 in profit) if the option expires in-the-money.
Target Price (also known as the strike price) is a term representing the value that an underlying asset must reach in order for an option to end in-the-money. For example, when using the one touch instrument and selecting touch, the option will end in-the-money if the underlying asset touches the target price.
Underlying asset is the asset (see underlying asset types) on which HighOption™ is writing an option.
Underlying Asset Types
An ownable, and thus tradable, entity that can be categorized in one of the following underlying asset types: Stocks, Commodities, Indices and Currencies. For full details of the assets available on HighOption please see the Asset Index page.