Glossary

Prestige Option provides a detailed glossary of important financial terminology for trading binary options.
  • LIVE WEBINARS Access Calendar Events
  • Videos Center Learn Step by Step
  • Library Read Online EBooks
  • Education Learn with a Pro
  • Glossary Understand Financial Terms
Trading binary options involves substantial risk and may lead to loss of all invested capital. Click here to read full risk disclosure

Glossary of Binary Options Terminology

ABCEIMOPS
Ask :
The Ask Price refers to the most recent price offered by a market maker to sell an option.
ASSET/INSTRUMENT :
An asset or instrument is any product that can be traded on the financial markets. An asset can be a stock, commodity, index or currency. The direction of the price movement of these assets is what binary options traders predict. That is, will the asset price increase or decrease by the expiry of the trade?
At-the-money:
At-the- money refers to the neutral outcome of a trade. This occurs when the option expires at the same value as it was originally when the trade was made. In this case, the trader’s investment in the underlying asset is returned in full.
Bid:
The bid is the market price at which an investor can sell an asset. The bid price is part of the formula used to calculate expiry levels.
Binary option:
Binary options is a form of trading where options are traded at a pre-set price. The amount or magnitude that the option rises or falls, does not affect the payout. All that matters is the direction of the price movement; whether it will increase or decrease in value. When trading binary options, you simply choose whether the selected asset’s price is going to go up, or down, over a given period of time.
Call option:
A Call option is a prediction that a given asset’s price will, at the time of the expiry of the trade, have risen higher than the opening price.
Commodities:
Commodities is a name given to bulk goods that are traded on the markets. They can include oil, metals, gold, coffee or grains, which can be traded as an underlying asset since their values are set at an international level. Visit our Asset Index page to see the full list of commodities options offered by Prestige Option.
Expiry rate:
The expiry rate is the value of an asset at the time of expiration. The time of expiration is selected when a trader enters into a trade.
Expiry time:
The expiry time is the precise time and date at which the trade closes and the option expires. The expiry time is selected when a trader enters into a trade.
In-the-money:
In-the- money refers to a correct prediction by the trader. This means that at the expiry time of the trade, the asset’s price finished in the direction that was forecast by the investor at the beginning of the trade. An in-the- money trade is a successful trade.
Indices:
Indices are a stock market’s index which represents the overall performance of a group of stocks. These can be traded as an underlying asset. Examples of indices include the American Dow Jones 30, NASDAQ and the FTSE 100. To see the full list of index options offered by Prestige Option, please visit out our Asset Index page.
Mid market:
The mid-market price is the average between the ask (purchase) and bid (sale) prices of an asset. It refers to the actual market price of the asset, with no spread.
OPTIONS:
An option is a contract which represents the right, but not the obligation, to buy or sell an underlying asset at a specified price on, or before a specified date. The investor can trade any financial product without purchasing the asset itself.
Out-of-the-money:
Out-of- the-money refers to an unsuccessful trading outcome. This means that the option expired with the asset’s price moving in an opposing direction to the trader’s prediction.
Put option:
A Put option is a prediction that a given asset’s price will, at the time of expiry, have fallen lower than the opening price.
Stocks:
Stocks are a share of a company’s ownership and the stock holder owns a part of its profits. Stocks can be held on any company listed on the stock exchanges. To see the full range of stocks options available at Prestige Option, please visit our Asset Index page.