American Option: The most common option that can be exercised anytime during its life.
Ask: The purchase price of an underlying asset.
Assets: Stocks, commodities, indexes or Forex currency pairs.
Asset class: This is a specific group of investments, e.g. stocks, forex, commodities and indices.
At-the-money: When the call and the put options will be identical at the expiry time. Investors receive full refunds of their initial deposits.
Bear: This is a trader who anticipates that market prices will fall.
Bear Spread: This is a binary options strategy in searching for optimal benefits when the underlying asset falls.
Bid: The price at which an asset can be sold
Binary options: Binary options are also known as fixed return trading. They can be used to trade assets and they payout pre-determined profits and losses.
Bond: A debt investment in which an investor loans money usually to a government or corporation.
Breakeven price: This is the value that price has to achieve in order that the trader can start to realize a profit.
Bull: This is a trader who anticipates that market prices will rise.
Bull Spread: The amount an asset must be sold to cover initial cost of acquiring.
Butterfly Spread: A limited profit and risk binary option strategy that is a combination of both bull and bear spreads. The butterfly spread is centered on 3 striking prices and can be constructed using calls or puts.
Call option: An option that will generate a pre-determined profit if the price of its underlying asset is higher at its expiry time than its opening.
Correlation: A statistical measure indicating the degree of movement of two different currency pairs are related.
Current Price: The last reported real-time price of the underlying asset unless otherwise specified.
CDO: Collateralized debt obligations are a form of organized asset-backed securities (ABS) whose values and payments are derived from a group of fixed-income underlying assets.
Commodities: This asset type comprises of goods and services that meet human needs and wants such as energy, food and metals.
Credit Default Swap: A swap contract involves buyers performing a series of premium payments to the seller in exchange for a refund should the asset go into default.
Currencies: Are forms of paper money used as an exchange between buyers and sellers.
Currency Option: Presents a trader with the right (but not obligation) to buy or sell a predetermined quantity of a particular currency at a specified exchange rate.
Currency Trading: The buying and selling global currencies. Currency trading is used by banks and financial institutions to support international trade. Individual investors can also speculate on currency trading using Forex.
Euro: The authorized currency of the Eurozone and is the world’s second largest reserve currency.
European option: This is a binary option that can only be carried out on its expiry date.
Exotic Option: This is a derivative possessing qualities that make it more complex than other commonly traded products such vanilla options.
Expiry Price: The real-time price of the binary options underlying asset quoted at the nominated time of expiry. The value is used to determine if the binary option expired in-the-money or out-of-the-money.
Expiry Time: The time and date at which a binary option lifetime will terminate.
Financial Transactions: These are events when contracts concerning buyers and sellers are executed in order to exchange assets for payment regularly resulting in a change in the financial position of the parties involved.
Forex: Forex is the most liquid and chief financial market in the world used to exchange and trade currencies by large fiscal institutions, businesses, governments, banks, currency speculators, other institutions and individuals.
Forex Option: These binary options utilize underlying assets based on currency pairs traded on Forex, e.g. GBP/USD and EUR/USD.
Futures: This option has a static payoff. Often referred to as the ‘all or nothing’ option or ‘one touch option.
Hedging: A strategy employed to maximize risk management. Typically this involves taking equal yet opposite positions in two diverse markets.
Indices: Are collections of stocks assembled according to a certain criteria.
Interest rates: A figure that denotes the cost of borrowing money, generally outlined as a percentage.
In-the-money: A term used for both a call option and a put option. For a put option this occurs when the strike amount is above the market price. Alternatively for a call option this occurs when the strike amount is below.
Intrinsic value: The gap between the opening and the current price of the underlying asset.
Investment: The amount of equity outlaid with the intent to make profit.
Investment Amount: The amount of capital invested in a binary option.
Liquidity: Also referred to as marketability, liquidity is the capacity to convert cash quickly.
Loan: An amount of money a borrower collects from a lender.
Long: Purchasing an asset with the anticipation it will increase in value.
Lot: The number of shares a trader can buy in one transaction.
Margin Account: An account where the broker lends the client cash to secure investments.
Mid-Market: The real market worth of an asset. The price is determined by the average of the bid and ask price.
NASDAQ: National Association of Securities Automated Quotations is the biggest electronic screen-based equity securities trading market in the USA and fourth in the world. There is no physical exchange involved, and thus often referred to as an ‘over the counter’ market.
One-Touch Option: Provides the investor with predetermined payout when the value of the underlying assest has reached or exceeds the preselected value.
Out-the-money: When the price registers a lower value at expiry time than the opening or strike one.
Payout: The revenue that investors receive if binary options expire ‘in-the-money’.
Pip: The fourth figure after the decimal point in a number. A pip is the smallest tradable unit of currency pairs.
Put option: The option to sell an asset at a predetermined amount within a predetermined timeframe.
Quotation: The highest price an investor is prepared to pay for assets and the lowest price an investor is prepared to accept.
Rate of return: The profit or loss of an investment over a designated time which is usually shown as a percentage.
Reuters: Reuters Group Limited is a UK-based Canadian company that delivers information about the international financial markets to the financial industry, media and corporate markets. Reuters's objective is to provide data, news, graphics and trading products.
RTS Index: The Russia Trading System is an index that tracks stocks and trade and is calculated in real time.
Security: An instrument that represents ownership of a stock, bond or the rights to ownership as represented by an option.
Share Price: The price of specific share or stock.
Shares: A company listed on the Stock Market can divide its worth into units of equal value which are termed shares. They can then be marketed for sale in order to raise cash. As individual who purchased shares in a company is titled a shareholder and becomes one of the owners of that company.
Short: This word describes when a investor sells an asset.
Short Straddle: An unbiased binary options strategy involving selling and simultaneously buying the same underlying asset.
Spread: The variance between the Ask and Bid amounts of an underlying asset.
Stock Exchange: The location where shares are sold and bought.
Stock Market Analyst: An expert who is capable to skillfully consider the worth of company listed on the Stock Exchange.
Stock Option: A stock option can be sold by one party, that provide the buyer the right, but not obligation, to buy or sell a stock at a predetermined price within a specific timeframe or date.
Stocks: The initial capital invested in the business or company by its founders.
Strip Strategy: An unlimited return and risk binary options strategy that is used when investors consider that price of the underlying asset is probable to decline as opposed to increase as a result of increasing instability.
Swap: This term describes an exchange of pre-determined payouts during a timeframe.
Trading hours: Individual assets have specific trading hours, days and holidays.
Vanilla Option: A standard class of options which basic components including expiration dates and strike.
Volatility: This is a measure of price variation of an underlying asset.
Yield: Represented as a percentage, a yield indicates the annual return on an investment.