Key Words To Remember in Binary Options Trading

Posted: January 12, 2012 in Uncategorized

Binary option provides two principal varieties of option: the cash-or-nothing option as well as the asset-or-nothing option. The first approach pays a fixed sum of money when the option expires in-the-money, although the other repays the value of the underlying security. This kind of option takes into consideration the scale of price movements of an underlying asset.

Below are some of the terminologies generally used within this option buying and selling.

Ask. The quoted price that any sort of security can be purchased. Also named the offer price.

At-the-money. When the strike price is equal to the present price of the underlying security. This can be when the option neither gains nor loses in value and is also considered the breakeven position.

Bid. Virtually speaking, this will be the offered value that a security can be sold.

Buying power. The total sum which will be used to purchase a security without putting additional money in.

Call. An option contract that permits, even though non-compulsory, the purchase of the specific number of shares at a specific value, on or ahead of a set date.

Expiration. The time and date at which the underlying asset’s value is valuated against the strike price in order to establish the payoff.

In-the-money. An option when the strike price is less than the present price of the underlying stock. A put option is “in-the money” should the price of the underlying security is under the strike price. A call option is “in the money” should the price of the underlying security is higher than the strike price.

Intrinsic value. Refers to what amount a call option is in the money.

Load. The sales charge that may perhaps be demanded for mutual fund investment.

Out-of-the-money. An option that loses value upon expiration. For call options, this is when the strike price is higher than the underlying price. For put options, this is when the strike price is below the present underlying stock price.

Payout. The amount of income earned on the trade or investment.

Put. An option contract which allows, while non-compulsory, the sale of the particular number of shares at a specific price, on or ahead of a set date.

Spread. The difference in between the ask and bid prices.

Stop loss. A concept developed to limit losses or a rule that creates a sell when prices fall at a specific amount.

Strike price. Also known as the exercise price. It really is the price at which an option can purchase or sell the underlying security.

Ticker symbol. An abbreviation used to recognize a corporation on the stock exchange that it’s listed.

Trailing stop. Akin to stop loss, it keeps track of an asset as it rises in order to secure the gains.

Volatility. The measure of the propensity of price fluctuations of any sort of market or security over a time period.

These are just some of the terms used in binary option market. If you ever make a decision to trade, make sure you be part of or enroll in a platform that facilitates several currencies like the Euro, the US Dollar, as well as the British Pound Sterling. Coping with many currencies shows that the platform has an global presence and is also reputable.

Decide on the  binary options trading platform which utilizes tight actions to safeguard your details from illegal entry, losses, or improper disclosure. Try to look for one which utilizes the latest software program and encryption technologies.


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