BINARY BROKERS GLOSSARY
What is an Asset
An asset is the
underlying instrument used to determine a contract; an asset may be a
commodity, a stock, a Forex currency pair, or any index.
What is At-the-Money
At-the-money is term
describing a neutral loss and gain as a result of the asset value at expiry
being roughly what it was at purchase
What is an American
Style Option
An binary option that
can be exercised at any time on or before its expiration date.
What is AMEX
AMEX is the
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What are Binary
Options
Binary Options are options
which allow traders to earn a fixed amount if they correctly predict whether
the value of the underlying asset will reach above or below the strike price
when it expires. If traders incorrectly predict the direction of the asset’s
value, they lose their investment.
What is a Binary
Option Broker
A company that acts as
an agent for making securities transactions.
What is a Call
Option
A call option is one of
the two option choices. If a trader believes that the value of the underlying
asset will reach a higher value at the time of expiry, then they can purchase a
call option.
What is a Closing
Price
Closing Price is the
final price of a security at which a transaction was made.
What is CBOE
CBOE is the Chicago Board
of Exchange
What is COMEX
COMEX is the Commodity
Exchange Inc, New York
What is a Commodity
A basic good used in
commerce which is usually uniform across producers and can be traded on an
exchange.
What is a Contract
Size
A contract size is the
quantity of goods or commodities underlying futures, forward and option
contracts.
What is Crude Oil
The unrefined state of
petroleum, Crude Oil is one of the world’s most important and well-traded
commodities. WTI or West Texas Intermediate is a type of low sulphur crude oil
or sweet crude, used as an oil benchmark or marker.
What is CSCE
CSCE is the Coffee,
Sugar and Cocoa Exchange.
What is a Currency
Pair
The two currencies that
comprise a Forex rate. A Forex rate is the amount that the first currency in
the pair is worth expressed in terms of the second currency.
What is CySEC
The Cyprus Securities
and Exchange Commission is the supervisory and regulatory authority for binary
options in Cyprus
What is a Day Trade
A position (stock or
option) that is opened and closed on the same day.
What is Delta
Delta is a measure of
the rate of change in an option's theoretical value for a one-unit change in
the price of the underlying stock.
What is an Economic
Indicator
A statistic that indicates
current economic growth and stability, or the lack of it. Common indicators
include employment rates, Gross Domestic Product (GDP), inflation, retail
sales, etc.
What is European
Central Bank (ECB)
ECB is the Central Bank
for the new European Monetary Union
What is a European
Style Option
An option that can be
exercised only on its expiration date and not before.
What is an Exercise
Price
An exercise price is the
price at which the owner of an option can purchase (Call) or sell (Put) the
underlying stock. Used interchangeably with striking price, strike, or exercise
price.
What are Exotic
Options
Exotic Options are these
are types of options used exclusively by big time traders before they were
available to the public. Binary options are simplified versions of exotic
options.
What are Expiry
Terms
Expiry time is the date
& time when a Binary Option terminates and hits the end of its destined
life cycle.
What is Federal Reserve
(FED)
FED is the Central
Banking system for the United States
What is the Financial
Industry Regulatory Authority (FINRA)
The Financial Industry
Regulatory Authority (FINRA), is the largest independent regulator for all
securities firms doing business in the United States
What is FINEX
FINEX is the Financial
Instrument Exchange, New York
What is Foreign
Exchange (Forex)
The simultaneous buying
of one currency and selling of another.
What is FTSE
The FTSE 100, 250 and
350 are the best-known stock indices in the UK UK
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What are Futures
Futures is a class of
indirect securities, made up of a contract to either buy or sell some sort of
commodity at a time in the future. A strict futures contract requires that the
holder buy or sell the commodity, while a futures option gives them the choice
to do so.
What is Fundamental
Analysis
One of the two major
schools of analysis, used to examine macroeconomic data such as national
economic health, central bank decisions, political events, or geologic events.
At its core fundamental analysis believes that assets may be mispriced
temporarily, but eventually will reach their correct price, and by examining
macroeconomic events one can deduce what that eventual correct price will be.
What is In-the-money
This is a term used to
describe when an investor reaches a position when they realise profit. A call
option is in the money if the expiry price is above the strike price. A put
option is in the money if the expiry price is below the strike price.
What is an Index
Option
An index option is the
option whose underlying interest is an index. Generally, index options are
cash-settled.
What is LIFFE
LIFFE is the London
International Financial Futures Exchange
What is LME
LME is the London Metal
Exchange
What is LSE
LSE is the London Stock
Exchange
What is a Margin
Requirement
A margin requirement is
the minimum equity required to support an investment position. To buy on margin
refers to borrowing part of the purchase price of a security from a brokerage
firm.
What is NYMEX
NYMEX is the New York
Mercantile Exchange
What is NYSE
NYSE is the New York
Stock Exchange
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What is Over-the-Counter
(OTC)
Products which are sold
directly between two parties; distinguished from exchange trading, which occurs
via exchanges and brokers set up for the purpose of managing these
transactions. Binary options are available in a limited number of exchanges,
but are primarily sold as over-the-counter products online.
What is Out-of-the-Money
A term used to describe
an investor finishing in a position where they experience a loss. In binary
options this generally results in a loss of 80% to 100% of the initial
investment. If a Call option was purchased, it is out-of-the-money if the
expiry price is lower than the current price was at the time of purchase; if a
Put option was purchased, it is out-of-the-money if the expiry price is higher
than the current price was at the time of purchase.
What are Put Option
Put Option is one of
the two option choices. If a trader believes that the value of the underlying
asset will drop to a lower value at the time of expiry, then they can purchase
a call option.
What is SEC
SEC is the Securities
and Exchange Commission. The SEC is an agency of the federal government which
is in charge of monitoring and regulating the securities industry.
What is a Stock
Index
A stock index is the compilation
of a number of stocks into one total price, expressed against some base value
from a specific date, thus allowing investors to easily follow the performance
of certain groups of stocks.
Binary Options Glossary
(2013)
BinaryBrokers.Blogspot.com