Glossary of binary option terms

If you are looking for a binary options term that is not included here please let us know in the comments. All the terms here are expanded on with examples in our trading guide.

Binary option
An option with only 2 possible outcomes. You will win a predefined amount if you finish in the money and you will lose a predefined amount if you finish out of the money. Most non-binary options have the possibility of winning or losing any amount within a wide range.

Boundary
Boundary binary options ask if you think the price of an asset will be within a certain range at the time the option expires. For example at the close of trading will 1 USD be above .94 Euros and bellow .97 Euros.

Call
A call trade means you are investing in the price of the asset to rise from its current level by the time the option expires. Opposite of “put”.

Entry price
The price of the asset at the time you opened your binary option. Same as “target price”.

Exit price
The price of the asset at the time your binary option expires. Same as “expiry price”.

Expiration
The time at which a binary option ends and is closed.

Expiry price
The price of the asset at the time your binary option expires. Same as “exit price”.

High/low
High/low binary options let you trade on whether the value of an asset will go up or down between the time you place the option and its expiry time.

In the money
A winning binary option. If you put that the price of an asset will finish below the entry price then any exit price below the entry price is in the money and you win. If you call that the price of an asset will finish above the entry price then any exit price above the entry price is in the money and you win.

Opposite of “out of the money”.

One touch
One touch binary options allow you to predict whether the value of an asset will touch a certain price point before the option expires. The common time frames are longer than those for high/low with 1 hour, by the close of trading or 1 day are the most common.

These are usually offered on improbably high or low target prices (relative to the price at the time you take the option) so they can give a high payout %, typically from 160% – 500%.

Out of the money
A losing option. If you put that the price of an asset will finish below the entry price then any exit price above the entry price is out of the money and you lose. If you call that the price of an asset will finish above the entry price then any exit price below the entry price is out of the money and you lose.

Opposite of “in the money”.

Payout %
The % of your investment you will win if your trade finishes in the money. You receive this in addition to your original investment being returned. For example if you invest 100 m฿ on an option with 81% payout and your option finished in the money you will win 81 m฿ in addition to your 100 m฿ investment being returned.

If your option finishes out of the money you lose the 100 m฿ investment.

Put
A put trade means you are predicting the price of the asset will fall from its current level by the time the option expires. Opposite of “call”.

Target price
The price of the asset at the time you opened your binary option. Same as “entry price”.

If you are looking for a binary options term that is not included here please let us know in the comments.

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