Binary Options Glossary

The Various Types of Binary Options

For those who do not know what binary options really is, then it is such a condition when a buyer while purchasing any asset comes into a contract and the price of the asset is fixed which is decided at some pre-determined time. Now to understand the concept of binary options, it is important that one understands certain binary options glossary as well. The first and the most important term which comes in the purview of binary options glossary is an asset. Now what is an asset? While determining a contract, the underlying instrument that is used is called an asset. An asset might be a commodity, an index, a currency pair or stock. An asset is the core of binary options.

The next important component in the binary options glossary is the term At-The-Money. This term is generally used when we refer to a state of a loss or gain which is neutral in nature, and which arises from the rough difference between the value of the asset at the time of expiry of the contract and its value when it was purchased. In case, the value of the asset is higher at the time of expiry than its value at the time of its purchase, the investor makes a profit. These types of options are called Call Options. If the investor makes a profit, when, the value of the asset is lower at the time of expiry than its value at the time of its purchase, it is called a Put Option.

Now binary options glossary is often alternatively called Digital Options, where these types of options have a fixed payout and suffer a fixed loss. Now every option expires in a particular date and a particular time as mentioned in the contract. This time and date is called the Expiry Time. At this expiry time, the price of the asset is called the Expiry Price. Sometimes, Binary options are traded in exclusive markets years before being actually available to public. These are called Exotic options. In certain cases, people might make a contract to buy or sell any kind of commodity in the future. These kind of indirect securities are called Futures.

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