Basic Binary Options Terminology

Every single job in this world has a proper terminology that goes with it. And this especially goes for the financial jobs, in which terminology can mean much, and everyone involved in it should learn it. And that is why we are going to give you the basic binary options terminology, so you can get in this ever growing area of trade, and start making some money. So, without any further ado, let’s begin.

Binary Options

page101-300x168As we can see, the term “binary options” consists of two world – “binary” and “options”, and right away we can see that it has something to do with the number two. Well, yes, it has to do with the number two, because you only have two options to choose from. So, whatever you’re investing in, you only have the two options – “call” or “put”.

Call Option

This is one of the options available in Binary Options, and when a trader picks this option that means that the trader believes that the price of the instrument will increase. No matter how small the increase is, you still profit with this.

Put Option

“Put” is the other possible option to choose from, and when a trader picks this one, it means that he believes that the price of the instrument would go down. If you choose this option, and the price does go down, you are making profit, no matter how little the price went down.

In the Money

images (2)This term basically means that you have won the trade, and that you have made some money. Like, if you said that the price would go down, and it did; or if you predicted that the price would go up and it did. So, basically, this term states that you have won, like on a card game.

Out the Money

This term is being used when you lose the trade, or to put it simply, when you lose money. So, if you predicted that the price of an item would go down and it went up; or if you predicted that the price would go up, and it went down. Also, this is similar to a card game, only you use this term when you lose.

At the money

This term is being used when the price of an item you chose stays the same. So, basically, this means that you have neither won, nor have you lost, because the price did not change. If such a thing happens, your money gets returned to you in full, and you are free to use it to invest in something else.

Expiry Date

3binary_options_expiry_date_explainedEvery single Binary Option has an expiry date, which is a date at which that particular Binary Option is going to expire. Before that happens you need to choose a “call” or “put” option, but if you want, you can just leave it to expire.
So, as we have seen, Binary Options trading has its own special terminology that you need to learn before you start trading there. It may look complicated, but it is extremely easy, and after you read the meaning behind every term, you start to get it pretty quickly. Try out some of the recommended trading brokers, for example IQ Option, in order to gain some basic knowledge that is required for a successful trading.