Definition of Binary Options: Binary Options are like regular options in that they allow you to make a bet as to the future price of a stock. However, binary options are different in that if the "strike price" is met by the expiration date, the binary option has a fixed payoff of $ per contract Binary Options definition and how do they work? The product name “Binary Options” consists of two terms that require explanation, namely “binary” and “option”. You may already be familiar with the option from the field of classic stock options and it basically involves the right for the holder to buy or sell a certain underlying Binary options are a relatively new financial instrument which differs in that they have a fixed cost and that risks and potential profit are known in advance
Definition of Binary Options
Binary options trading is relatively simple. However, no matter how simple a trading opportunity, it is still vital to know how it works, and understand the basics. This dictionary can help you understand the concepts related to binary options trading, so that you can make more informed choices. Binary Option : The buyer enters a contract to purchase the right to buying an underlying asset. The price is fixed at a pre-determined expiration point in the future.
You do not actually own the underlying asset, and your profit or loss depends on how much you have invested. Your cost is determined at the beginning, so your risk of loss is known.
You do not lose more than your premium to purchase the contract s in question. Assets that binary options are based on include individual stocks, commodities, indices, and currency pairs. Binary Options Brokers : These are usually Web sites that allow for binary options trading, binary options define. Each broker offers a variety of options, and has different policies.
Binary Options Scam : Watch out for scams based on binary options. Binary Options Trading Platform : Each broker has a platform that can be used for binary options trading. Platforms offer different opportunities and features, as well as different assets. Research brokers and trading platforms before you commit. Call Option : In this option, you predict that an binary options define will expire at or above a certain point, expressing the belief that an underlying asset will gain in value.
If you are right, you profit when the underlying asset gains in value and is above a certain price at the pre-determined expiry time. CBOE : Chicago Board of Options Exchange. The largest options exchange, and a great research tool.
Close Now binary options define Some binary options brokers allow binary options define to close a trade before it expires.
This strategy allows traders to safely take a profit on a winning position, or to limit losses on a losing position, binary options define.
Not all brokers offer this option; some require you to carry your trade to the options expiry. Double Up : A few options brokers will allow you to duplicate an open trade quickly and easily, providing you with the chance to double your profits if you look to end in the money. Early Closure : The ability offered by some brokers but not all to close a position once it binary options define in the money.
This allows traders to lock in profits, without worrying about whether things will change and the position will suddenly become out of the money before the expiry. Expiry : The date and time that an option comes to an end.
This information is set when you buy the options contract. Binary options contracts have expiration anywhere between half an hour in the future and months in the future. Fixed Return Option : A type of binary option that provides a fixed return if you finish in the money.
It is usually expressed as a percentage, binary options define. A fixed return option allows you to know exactly how much you stand to earn, binary options define, on top of knowing exactly how much you stand to lose the amount you invested, if you are wrong, binary options define.
A call option indicates an increase in value, while a put option indicates that you expect the underlying asset to decrease in value. In the Money : A term that indicates that you have predicted the correct outcome, and that you will receive a payout.
The binary option expires, and you lose money. Pair Option : A type binary options define binary option that allows you to base your trade on the relative performance of different assets, such as whether or not oil will perform better than natural gas. Put Option : This is the type of option you trade when you believe that an asset will expire below its original purchase price. Range Accumulation Binary Option : Binary options in a series.
Each option covers a short period — a day or a week. Instead, you are paid the sum of all your payoffs at the end binary options define the period minus any losses. The idea is to give your position just a little more time to reach in the money status, binary options define. You might have to increase the size of your position in order to qualify for a roll over. Strike Price : This is the target price, or the price at which the options broker is willing to sell the option based on the contract, binary options define, at the expiry time.
In binary options, this the price at which you decide whether or not the asset will rise higher or lower. If you are right about which direction the asset moves, with it above or below the strike price at expiry, you end in the money and receive a payout.
Underlying Asset : This is the asset the binary option is based on: Individual equities, commodities, currencies, or indices. You do not actually own the asset when you trade binary options, binary options define.
Binary Options Binary options define Binary options trading is relatively simple. Digital Options : Another name for binary options. Share and Enjoy! Read more articles on Education. Binary Trading.
What Are Binary Options?
, time: 3:34Binary Options - Binary Option Definition, Trading Examples
Binary Option: The buyer enters a contract to purchase the right to buying an underlying asset. The price is fixed at a pre-determined expiration point in the future Binary options are a relatively new financial instrument which differs in that they have a fixed cost and that risks and potential profit are known in advance A binary option is a financial product where the parties involved in the transaction are assigned one of two outcomes based on whether the option expires in the money.
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