Important Binary Options Terminology You Should Know By Now

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When trading on the binary trading platform or on any other platform, it is essential that you know the terms used on that platform.

Your success as a trader depends on it because it really makes no sense to spend time Googling a term every time you see one that you do not understand.

Yes, it can be very overwhelming learning all the terms but when you use them over and over, they will become something like the alphabet.

You will never forget them.

Glossary of Important Binary Options Terminology.

The two most important terms on the binary platform are call options and put options.

These terms are used in every trade and their meanings are quite simple.

What Does Call and Put Mean?

When trading in binary options, you have one of two choices to choose from.

You may either choose to make a call option or a put option.

Making a call option means that you are predicting that the price of the asset will be higher than what it was at closing.

With the put option, you are predicting that the end price will fall below the strike price at the expiry time.

The call option and put option are quite simple; however, you will come to realize that there were other terms used in the definitions such as strike price and expiry time.

These new terms are also used in binary trading and it is good to know their meaning.

So here is a simple run-through of some basic binary terms.

Asset:

This is the underlying tradable instrument that binary options are based on to make contract determinations.

It includes stocks, currency pairs, indices, and commodities.

Expiry time:

As the name explains, this is the time and the day that your binary option expires.

Once this date is reached, all bids will be closed and you will either end in the money or out of the money.

In-the-Money:

At the time of expiry, if your trading options end with you making a profit, it is known as ending in-the-money.

So say for example you bought a call option and at the end of the bid, the price is higher than the strike price, then you will end in-the-money.

If it was a put option and the expiry price is below the strike price, you will also end in the money.

It is as simple as that.

Out-of-the-money:

This term is the opposite of in-the-money and simply means that you lose everything if at the expiry time the strike price ends opposite to what you predicted.

For example, if you bought a call option and the expiry price falls below the strike price, you will be out-of-the-money and you will lose your bid.

Strike Price:

Strike Price is a term that is used by binary options trader in a number of different ways.

However, it is mostly used to mean the cost a contract is set, at the beginning of the bid.

This price is also used to determine whether your bid ends in the money or out of the money.

Payout:

Payout is the agreed-upon value of money you (trader) stand to get as profit when your predictions are in the money.

Broker:

This is the brokerage company that allows you to trade binary options on the markets.

We highly recommended choosing the best binary options broker to avoid getting scammed.

There are many other binary options terminology used on the binary trading platform and as a trader, the constant use means that you will learn all their definitions and always remember them.

And while this is a good start, we recommend constant binary options education to ensure you're a success in the field.

Note: Trading binary options can be risky. Don't invest what you can't afford to lose.

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