Glossary and Binary Option Trading Terminology

Our binary option trading glossary is the quick and easy way for any Indonesian to learn about binary options terminology and increase your knowledge and confidence for when you do trade binary options. The following glossary lists the most common binary options trading terminology used by those from Indonesia.

At the money: Used when the market price of the asset is currently trading at or has closed at the exact target price.

Binary Option: A specific type of financial instrument that offers a fixed rate of return that is predetermined before the investment is made.

Boundary Instrument: A type of binary option in which the trader decides whether the market price at the time of expiry will be within a price range or outside of that set range.

Call: Used when the trader believes the market will rise for that binary option.

Demo Account: A fictitious account used to trade the virtual funds.

Digital Option: Another name for a binary option.

Early Closure: Some platforms allow a trader to close a position before the expiry time.

Expiry Level: This is the level of the asset at the time of the asset’s expiry and which the profit or loss will be based upon.

Expiry Time: The date and time at which an option expires.

High Option: A binary option type in which the trader believes the market price of an asset will expire above the current market price.

High/Low Instrument: A binary option in which a trader can decide if the asset’s market price will expire higher or lower than the current market price.

Inbound Option: One possibility of the boundary option. The trader decides if the market price will expire inside the predetermined price range.

Investment Amount: The amount of capital invested in an individual binary option.

In the Money (or ITM): This term means that the market price of the asset is currently trading at the target price or has closed and is profitable.

Long Term: This refers to long term expiry trades, trades that expire greater than 5 minutes such as daily, weekly, monthly.

Low Option: A binary option in which the trader believes the market price of an asset will expire below the current market price.

Market Price: The current price of the asset based on the providers data.

Maximum Position: The maximum investment stake per single trade for that binary option.

Minimum Deposit: The minimum investment required to activate a live binary option account.

Minimum Position: The minimum investment stake to open a trade for that binary option.

No Touch Option: A binary option trade in which the trader decides if the market price will not reach a predetermined price through the life of the option.

One Touch Instrument: A binary option trade in which the trader decides if the market price will reach a predetermined price through the life of the option.

Out of the Money: This term means that the market price of the asset is not currently trading at the target or has closed and is not profitable.

Outbound Option: One possibility of the boundary option, the trader decides if the market price will expire outside the predetermined price range.

Pairs Trading: A term used when the trader decides that one instrument will outperform another (e.g. Google will outperform Apple).

Put: Used when the trader believes the market will fall for that binary option.

Refund: This is the amount of money refunded to the trader if he/she has invested in an option that accounts for a refund if the option expires “Out of the Money”.

Return: The return is the percentage of the original investment that the trader will receive if the investment is profitable.

Short Term: This refers to short term expiry trades such as 60 seconds, 1 minute, 2 minute and 5 minute.

Strike Price: This refers to the market price of the asset as determined by the provider at the time of entry by the trader.

Target Price: Also known as the market price, is the current price of the asset as determined by the provider.

Time Remaining: The time that remains until the expiry of the binary option.

Touch Option: A Touch Option is a binary option that will expire in the money if the market price at any time during the life of the option touches a predetermined level.

Traded Amount: The amount of capital invested in an individual binary option.

Underlying Asset: The asset itself in which the trader is taking a binary option over.

Underlying Asset Types: 

You can trade binary options over a number of products from across the globe including –

Stocks (e.g. Apple, Google, Facebook, BP, Vodafone, Pairs Trading)

Commodities (e.g. Gold, Silver, Oil, Coffee, Sugar, Copper)

Indices (e.g. S&P 500, NASDAQ, NIKKEI 225, FTSE 100, KL Futures, Straits Times)

Currencies (e.g. EUR/USD, USD/JPY, AUD/USD)

Exotics (e.g. Bitcoin)

We hope that you found this helpful, however if you still have any questions please feel free to get in contact with us.