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Binary Options Trading - Glossary

Asset
The underlying instrument used to determine a contract; usually a commodity, stock, currency pair, or index. 

At the Money
A term used to describe a neutral outcome of a trade. That is, a situation in which the asset value at expiry is the same as it was at purchase. If this happens to you, the full investment amount will be refunded to your OptionsClick account.

Bearish Market
The terms bearish is used to describe a financial market or stock who's price is generally on a decline.

Boundary or Range Instrument/Platform
An instrument that allows the customer to decide whether the value of the underlying asset will be inside or outside a specified range at time of expiry. The range is demarcated by lower and higher target price limits.

Broker 
Binary options brokers host the trading platforms from which you can execute trades. Before you can trade binary options, you must register an account with a broker.

Bullish Market
The terms bearish is used to describe a financial market or stock who's price is generally on an incline.

Call
Trading on an asset using the “High/Low” instrument/platform with the presumption that the value of the asset will be higher at expiry than it was at purchase.

Commodities
A general name given to raw materials from a variety of economic sectors such as energy, food, or metals. 

Charting
The practice of plotting an option’s price at successive points in time. It is a tool often used to aid in technical analysis.

Current Price
The price of something as reported in “real time” without delay. Some websites and/or trading sites report results that are delayed by fifteen minutes or more. An option that offers a fixed return that is predetermined by contract.

Currency Pairs
A financial instrument where the value of one currency pair directly correlates to the price of a different currency pair.  The first currency listed is known as the base currency while the second is known as the counter currency.  Trading currency pairs with binary options requires the trader to predict whether or not the price of the asset will climb or fall within a certain expiry time.  An example would be the EUR/USD displaying a current level of 1.38702 meaning that 1 Euro is valued as 1.38702 U.S. Dollars.

Deposits
Funding your trading account with the minimum deposit amount or of an amount that you please. Oftentimes brokers allow you to fund a trading account with numerous methods, such as a with a credit card, bank-wire, Skrill (Moneybookers), Neteller, PayPal, and Cash-U.  Oftentimes after a deposit you will be asked to verify your identity just to confirm that no fraud is being committed.

Early Closure
The ability to close an open position so that the option will immediately expire.

Exotic Options
A type of option that was traded on exclusive markets for years but has now become available to the public—in a simplified form—as binary options.

Expiry Level
The value of an underlying asset at the time of expiry. It is based on a feed provided by Data Provider. 

Expiry Time
The time and date when an option or trade expires.

Fundamental Analysis
One of two major schools of economic analysis, it is used to examine macroeconomic data such as national economic health, central bank policies, and political or geologic events. Fundamental analysis holds that assets may be mispriced temporarily, but will eventually reach their correct price. By examining macroeconomic events, one can deduce the correct eventual  price.

High
An option or trade in which the investor presumes that the underlying asset will expire at a price that is higher than the target price.

High/Low Instrument/Platform
An option or trade that gives the investor a predetermined fixed payout if an underlying asset expires at a price that is higher or lower than it was at the start of the trade, provided that the selected option or trade expired “in the money.”

Index/Indices
An index represents a basket of stocks. 

Inside/Outside
The position chosen by the investor for their option or trade using the “Range” instrument/platform; and/or the final position of the investor’s trade at expiry.

Investment Amount
The amount of money invested in a particular option or trade, also referred to as “the stake.”

In the Money
A term used to describe an asset that, during a specific option/trade period, trades in the position chosen by an  investor; and/or when an investor finishes an option/trade period in a profitable position.

Low
An option or trade in which the investor presumes that the underlying asset will expire at a price that is lower than the target price.

Market Price
A quoted price that represents the current value of an underlying asset based on a feed provided by Data Provider.

No Touch
An option or trade in which an asset does not reach or surpass its target level.

Out of the Money
A term used to describe an asset that, during a specific option/trade period, trades in a position that has not been chosen by the  investor; and/or when the investor finishes an option/trade period in an unprofitable position.

Outside/Inside
The position chosen by the investor for their option/trade using the ‘Range’ instrument/platform, and/or the position of the investor’s trade at expiry.

Put
Trading an asset using the “High/Low” instrument/platform with the presumption that its value at expiry will be lower than it was at purchase.

Range or Boundary Instrument/Platform
An instrument that allows the customer to choose whether the value of an underlying asset at expiry will fall inside or outside a specified range. The range is demarcated by lower and higher target price limits.

Refund
The amount refunded to the investor if an option expires “at the money.”

Return
The amount returned to the investor if an option expires “in the money.” For example, if an investor invests $100 with an 85% payout, the return will be $185.

SSL
Otherwise known as Encrypted Security, it keeps your financial and personal information safe, so you can be worry free when signing up or providing your information to a binary options broker.

Stock
A term that refers to shares of a specific company.

Strike Price
The price of an asset at the time of sale, which is used to determine whether a contract expires “in the money” or “out of the money.”

Target Price
Sometimes referred to as the “strike” or “purchase” price, this is the price at which broker is willing to “sell” a particular option.

Technical Analysis
One of two major schools of analysis, it is used to examine historical data in order to predict future trends in the price of an asset. Technical analysis holds that all aspects of an asset price are built into its market price. As a result, certain trends can be deduced in order to determine which direction an asset will take.

Time of Expiration (Expiry)
The time and date when an option/trade expires, also referred to as “expiry time.”

Touch Instrument/Platform
An option that gives the investor a predetermined fixed payout if the trader selects one of two possible outcomes:
1. Touch:  To be eligible for payout, it is sufficient for an option to touch or surpass a predetermined level just once during a specific option/trade cycle. If the predicted level is not reached or surpassed even once, the initial investment is lost.
2. No Touch: To be eligible for payout the asset must not reach or surpass a predetermined level during a specific option/trade cycle.

Touch
An option/trade whereby the asset reaches or surpass a predetermined level. To be eligible for payout, it is sufficient that the predicted level is reached or surpassed only once during the option/trade life cycle.

Underlying Asset
OptionsClick offers binary options on many different internationally traded financial assets, including currencies, indices, stocks, and commodities. 

Underlying Asset Types
Stocks (e.g., Google, British Airways)
Commodities (e.g., Gold, Brent Crude)
Indices (e.g., NASDAQ, FTSE 100)
Currencies (e.g., USD, EUR)

Volatility
Oftentimes a problem with currency pairs, it is the likelihood that an asset will change directions in a short amount of time.  Makings accurately predicting the future direction of an asset much harder, so try trading assets that have high volume and are less prone to change directions quickly.

Volume
The total number of shares or contracts traded during a given market period.  Also serves as a technical analysis instrument where traders can predict whether or not a trade is worth a market move.

Withdrawals
Executing partial or all of your funds to be transferred out of your trading account to your desired banking or financial account.  Oftentimes takes up to 4-7 business days to complete.

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