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Terminology

60-Second Option

60-Second Option

A binary trade that expires in a period of 60 seconds, also known as Quick Option type.

Above Option

Above Option

Also known as “Call.” The formal term for an option that has a closing price that is higher than its purchasing price.

American Option

American Option

An option that can be exercised at any time during its lifespan. These Options, unlike European Options (i.e. binary or digital) do not need to wait until maturity to be exercised.

Amount for Withdrawal

Amount for Withdrawal

All brokers have a minimum withdraw amount. You may check the minimum amount on the broker’s site or from your manager.

Arbitrage

Arbitrage

Selling and purchasing financial instruments simultaneously, in order to benefit from price discrepancies.

Asset (Underlying Asset)

Asset (Underlying Asset)

It is a Сommodity (Gold, Silver, Oil etc.) Index, Security (Apple, Facebook etc.), Currency pair (Forex) or any another asset. The price of the asset is essential part of binary option.

Ask Price

Ask Price

The price at which an investor can buy an asset in the financial markets. The asking price is a part of the formula that is used to calculate the expiry level of an instrument.

At the money (ATM)

At the money (ATM)

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

Available Margin

Available Margin

Funds available for trading (unattached to any position yet).

Averaging Down

Averaging Down

Buying more of a stock or an option at a lower price than the original purchase so as to reduce the average cost.

Balance

Balance

The amount of money held in your account excluding profits and losses of currently open positions.

Bearish market

Bearish market

Where the overall market conditions are such that assets are decreasing in value and heading in a downward direction. Indicates to investors that the bears are in control of the markets.

Below Option

Below Option

Also known as “Put.” The formal term for an option that has a closing price that is lower than its purchasing price.

Beta

Beta

A figure that shows how much the stock tends to move with the market as a whole.

Bid Price

Bid Price

The price for which the market maker will buy the base currency.

Bid/Ask Spread

Bid/Ask Spread

There’s a difference between the prevailing bid and ask price. Generally, option contracts that are liquid, tend to have a tighter bid/ask spread while option contracts that are not as liquid, tend to have a wider bid/ask spread.

Binary Option

Binary Option

It is a derivative financial instrument in which profit and loss are known in advance and specified in the option. The trader has a profit in case his / her financial forecast regarding the price of asset was correct. He/she do not actually own the underlying asset. Profit or loss depends on how much trader have invested and both are known when entering the position. Trader do not lose more than his/her investment. Assets that Binary Options are based on include individual stocks, commodities, indices, and currency pairs.

Binary Options Trading Platform

Binary Options Trading Platform

Each broker has a platform that can be used for Binary Options trading. Platforms offer different opportunities and features, as well as different assets.

Black-Scholes Formula

Black-Scholes Formula

The first widely-used model for option pricing. This formula can be used to calculate a theoretical value for an option using current stock prices, expected dividends, the option’s strike price, expected interest rates, time to expiration and expected stock volatility. While the Black-Scholes model does not perfectly describe real-world options markets, it is still often used in the valuation and trading of options.

Bonus

Bonus

Finance that is added to a trader’s account. Bonus money allows traders to have more leverage and depth when trading. Bonuses have specific terms and conditions, and it is highly recommended to read these bonus policies prior to accepting it. In recent time many regulatory agencies restricted brokers practice for bonus granting.

Boundary

Boundary

A boundary or a range of instruments that allows a trader to set a specific range for the binary option. The trader decides whether the price of an asset will be within or without the set range once the option expires. The range is specified by higher and lower target price limits. See also Range Option.

Break Even Point(s)

Break Even Point(s)

The stock price(s) at which an option strategy results in neither a profit nor a loss. While a strategy’s break-even point(s) are normally stated as of the option’s expiration date, a theoretical option pricing model can be used to determine the strategy’s break-even point(s) for other dates as well.

Broker

Broker

A person acting as an agent for making securities transactions. An ‘Account Executive’ or a ‘broker’ at a brokerage firm deals directly with customers. A ‘Floor Broker’ on the trading floor of an exchange actually executes someone else’s trading orders.

Broker Ratings

Broker Ratings

Buy, sell, or hold recommendations or ratings given to individual company stocks by securities analysts, depending on how they think the stock will perform in the short- or long-term.

Bullish market

Bullish market

Where the overall market conditions are such that assets are increasing in value and heading in an upward direction. Indicates to investors that the bulls are in control of the markets.

Buy

Buy

You ‘buy’ a market if you think it will rise (if you are opening a new bet). You also ‘buy’ to close out an existing ‘sell’ bet.

Buy Out

Buy Out

Trading platforms may offer investors the ability to “buy out” existing positions prior to their Expiry. Put simply, the “buy out” enables investors to close (sell) an existing position prior to the position’s official expiry time, regardless if the position is “in the money” or “out of the money”. An investor may choose to close his/her existing position, while the specific option is still tradeable by simply clicking on the “Sell” button in the trading platform. See Early Closure also.

Cable

Cable

Trader jargon referring to the Sterling/US Dollar exchange rate. So called because the rate was originally transmitted between the London and New York exchanges via the transatlantic telegraph cable in the mid-1800s.

Call

Call

This type of gives an income in case the price at expiry (another – stock price) is above the strike price (UP).

Carry Trade

Carry Trade

An investor sells a certain currency with a low interest rate and uses the funds to purchase a different currency at a higher interest rate, thus capturing the difference, or profit, between the two rates.

Cash Settlement Amount

Cash Settlement Amount

Settlement of a futures contract in cash rather than in the physical asset underlying the contract.

CBOE

CBOE

The Chicago Board Options Exchange

CBOT

CBOT

Chicago Board of Trade

Central Bank

Central Bank

A government or quasi-governmental organisation that manages a country’s monetary policy. For example, the U.S. Central Bank is the Federal Reserve, and the German Central Bank is the Bundesbank.

Charts

Charts

Visual representations of raw data. Investors can learn to spot recurring patterns on financial charts to help them make informed decisions about a market or a company.

Charting

Charting

The practice of plotting an option’s price at successive points in time. It is a tool often used to aid in technical analysis.

Class of Options

Class of Options

A term referring to all options of the same type, either calls or puts, covering the same underlying stock.

Closing

Closing

The process of ending an existing trade. It results in a profit or loss being realised.

Closing Price

Closing Price

The final price of a security at which a transaction was made.

CME

CME

Chicago Mercantile Exchange

COMEX

COMEX

Commodity Exchange Inc, New York

Are there any commissions upon making transactions with my trading account?

Are there any commissions upon making transactions with my trading account?

Usually, brokers do not take any commissions on your transactions. But such commissions can be taken by the payment systems or payment aggregator. In some cases the fee for N-th withdrawals within a calendar month might be applied.

Commodity

Commodity

A basic good used in commerce which is usually uniform across producers and can be traded on an exchange. Soft commodities are goods that are grown, such as coffee and sugar, while hard commodities are extracted through mining, such as gold and coal.

Contract Size

Contract Size

The quantity of goods or commodities underlying futures, forward and option contracts. Most equity options have a contract size of 100 shares.

Contract Neutral Hedging

Contract Neutral Hedging

A static hedging technique that involves the buying of 1 put option, or selling 1.

Cover

Cover

An act of lowering risk exposure by closing an open position. This term is used most frequently to describe the purchase of an option or stock to close out an existing downwards position for either a profit or loss.

Credit

Credit

Money received in an account either from a deposit or a transaction which increases the account’s cash balance.

Crude Oil (& WTI)

Crude Oil (& WTI)

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.

CSCE

CSCE

Coffee, Sugar and Cocoa Exchange

Current / Market Price

Current / Market Price

The Market price, or the current price of the asset are determined objectively by real-time data providers. Once the binary position has been purchased the price at which it was executed becomes the strike price.

Currency Pair

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.

Day Trade

Day Trade

A position (stock or option) that is opened and closed on the same day.

Delta

Delta

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.

Delta Neutral

Delta Neutral

When positive Delta Options and negative Delta Options offset each other to produce a position that neither gains nor decreases in value as the underlying stock moves slightly up or down.

Deposit

Deposit

The funds required as an initial outlay in order to open a trading account. This is not to be confused with the amount that the trader chooses to place on a trade.

Depreciation

Depreciation

A fall in the value of an asset.

Derivatives

Derivatives

A financial instrument, whose value is derived in part from the value and characteristics of another financial instrument. Examples of derivatives are options and futures.

Digital Options

Digital Options

It is another name of Binary Options.

Discount

Discount

An adjective used to describe an option that is trading at a price less than its intrinsic value.

Discretion

Discretion

Freedom given by an investor to his floor broker or Account Executive to use his own judgment regarding the execution of an order.

Double Up

Double Up

Binary Options brokers may allow you to duplicate an open trade quickly and easily, providing you with the chance to double your profits if you look to end in the money.

Down Trade

Down Trade

A trade backing a particular price to fall.

Downtrend

Downtrend

A price trend characterised by a series of lower highs and lower lows.

Early Closure

Early Closure

This is a feature on some platforms that allows a trader to close a position before the expiry time.

Economic Indicator

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.

EMA’s / Estimated Moving Averages

EMA’s / Estimated Moving Averages

Indicators that traders can use to see moving averages of underlying assets price movements.

Entry Rate

Entry Rate

The current market price for an underlying asset when an option is executed. See also Strike Price

Equity

Equity

Your account balance, including profit and loss of all open positions.

Equity Option

Equity Option

An option on shares of an individual common stock or exchange traded fund.

EUREX

EUREX

European Exchange, Frankfurt.

ECB (European Central Bank)

ECB (European Central Bank)

The Central Bank for the new European Monetary Union

European Style Option

European Style Option

An option that can be exercised only on its expiration date and not before.

Expiry Level / Expiry Rate

Expiry Level / Expiry Rate

This is the level of the asset at the time of the asset’s expiry which is based on data received from broker data provider.

Expiry Time

Expiry Time

The date and time when the option expires.

Exercise Price

Exercise Price

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.

Exotic Options

Exotic Options

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.

Expiration Cycle

Expiration Cycle

The calendar cycle of expiration months that is assigned to basic exchange-traded stock options. Although some options have contracts in every month, most equity options are traded with expiration months in every quarter.

Expiration Date

Expiration Date

The date at which an option and the right to exercise it cease to exist.

Expire Worthless

Expire Worthless

When out of the money options lose all their value and expire.

Extrinsic Value

Extrinsic Value

Also known as “Premium Value” or “Time Value.” It is the difference between an option’s price and the intrinsic value.

What happens if the expiry price will be the same as the level of the acquisition of an option?

What happens if the expiry price will be the same as the level of the acquisition of an option?

If the expiry price is identical to the strike price, the value of the option returns to a trader.

Exposure Coverage

Exposure Coverage

The Net Exposure (%) covered by your equity.

Federal Reserve (FED)

Federal Reserve (FED)

The Central Banking system for the United States.

Fibonacci Retracements

Fibonacci Retracements

Also known as Fibs or fib lines. Created via measuring very specific points in a price movement. These are used as an indicator to help determine what a price is likely to do.

Fill

Fill

The execution of an order.

Fill or Kill Order (FOK)

Fill or Kill Order (FOK)

A type of option order which requires that the order be executed completely or not at all. If the order cannot be completely executed (i.e., filled in its entirety) as soon as it is announced in the trading crowd, it is to be ‘killed’ (i.e., cancelled) immediately.

Financial Industry Regulatory Authority (FINRA)

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.

Financial Instrument

Financial Instrument

A physical or electronic document that has intrinsic monetary value or transfers value. For example, cash, shares, futures, options and precious metals are financial instruments.

FINEX

FINEX

Financial Instrument Exchange, New York

Fiscal Policy

Fiscal Policy

The use of government spending and taxation to influence macroeconomic conditions.

Fixed Income

Fixed Income

When an investment yields a regular or fixed return.

Fixed Return Option

Fixed Return Option

A type of Binary Option that provides a fixed return if you end-up in the money. It is usually expressed as a percentage on your investment amount. If you purchase a call option of USD1,000 for a company, and there is fixed 60% return for an in the money result, you know that – if you are right and the stock increases in value – you will receive USD 600 (60%), plus your initial investment of USD1,000, i.e. a total of USD1,600. A fixed return option allows you to know exactly how much you stand to earn, on top of knowing exactly how much you stand to lose (the amount you invested, if you are wrong).

Flip

Flip

Changing your position on the current market rate. You can usually flip your position up to 5 minutes or so before the option expires.

Floor Broker

Floor Broker

A trader on an exchange floor who executes trading orders for other people.

Floor Trader

Floor Trader

An exchange member on the trading floor who buys and sells for his or her own account.

Foreign Exchange (FX or Forex)

Foreign Exchange (FX or Forex)

The simultaneous buying of one currency and selling of another.

FTSE

FTSE

The FTSE 100, 250 and 350 are the best-known stock indices in the UK and are used primarily to bench mark the performance of UK companies by market capitalisation. The constituent companies within each index are calculated quarterly. Informally known as the ‘Footsie’, the indices are maintained by FTSE Group, which is jointly owned by the Financial Times and the London Stock Exchange.

Fundamental Analysis

Fundamental Analysis

It is a method of evaluating a security by utilizing economic, financial and additional factors. The goal is to analyze all the factors that can affect a security, such as overall economic conditions, industrial environment and company-specific factors.

Future (Forwards)

Future (Forwards)

A future or forwards rate is notionally an agreement to conduct a transaction at some specified time in the future where the price is agreed now. Often the price of a future or forwards bet will differ from the cash price.

Gap

Gap

The phenomenon of a market trading at a price away from the previous traded price without trades occurring at intervening prices. Usually, but not necessarily, relates to when a market resumes trading after a period of closure.

Gamma

Gamma

The rate of change of a stock option’s delta, for one unit change in the price of the underlying stock.

GDP

GDP

Gross Domestic Product, the total value of all final goods and services produced by the economy. A key measure of national income and output for a country’s economy.

Greeks

Greeks

A set of mathematical criteria involved in the calculation of stock option prices.

Hedge (Hedged Position)

Hedge (Hedged Position)

A position established with the specific intent of protecting an existing position. For example, an owner of common stock may buy a put option to hedge against a possible stock price decline.

High / Low Instrument (Option)

High / Low Instrument (Option)

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.

High Option

High Option

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

Historic Volatility

Historic Volatility

A measure of actual stock price changes over a specific period of time.

HKFE

HKFE

Hong Kong Futures Exchange

Holder

Holder

Any person who has made an opening purchase transaction, call or put, and has that position in a brokerage account.

Illiquid Market

Illiquid Market

Usually in an illiquid market, a small amount of business often moves prices by a disproportionate amount, and bid and offer prices can be far apart.

In the Money (ITM)

In the Money (ITM)

This term means that the market price of the asset is currently tradin g or has closed and is profitable.

Inbound Option

Inbound Option

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

Index

Index

A compilation of several stock prices into a single number, for example, the S&P 100 Index.

Index Option

Index Option

An option whose underlying interest is an index. Generally, index options are cash-settled.

Indicators

Indicators

Data markers that indicate the strength, and significant trends of a nation’s economy.

Individual Volatility

Individual Volatility

The volatility percentage that justifies an option’s price. A theoretical option pricing model can be used to generate an option’s individual volatility when the quantifiable factors (stock price, time until expiration, strike price, interest rates, and cash dividends) are entered along with the price of the option itself.

Initial Margin Requirement

Initial Margin Requirement

The amount needed as available trading resources in a trader’s account in order to open a position.

Institution

Institution

A professional investment management company. Typically, this term is used to describe large money managers such as banks, pension funds, mutual funds, and insurance companies.

Instrument

Instrument

Another term used for assets.

Interest Rate Futures

Interest Rate Futures

These (interest rate) futures allow you to take a view on all the main interest rate contracts, including Short Sterling, Gilt, Bund, Eurodollar, JGB and T-Bond. With short-term interest rate contracts, you can bet on the direction of a country’s three-month interest rates. This means that if you think short-term interest rates will fall, you ‘buy’ and if you think rates will rise, you ‘sell’.

Intrinsic Value

Intrinsic Value

The value of an option if it were to expire immediately with the underlying stock at its current price.

Investment Amount

Investment Amount

This is the amount of money used to purchase the binary options contract. It is the money at stake for a put or call option.

Inflation

Inflation

The rate at which the price of goods and services rise within an economy, or the rate in which money loses its value over time. In most economies, a healthy inflation rate is under 3%. Negative inflation (deflation) is considered dangerous to economies.

IPE

IPE

International Petroleum Exchange, London

ISE

ISE

International Securities Exchange

IPO

IPO

Initial Public Offering. Private company’s first offer of stock to the public.

Lagging Indicators

Lagging Indicators

Economic indicators that follow rather than precede a country’s overall pace of economic activity.

Last Dealing Time

Last Dealing Time

The last time (on the last dealing day) you may trade on a particular market.

Last Trading Day

Last Trading Day

The last business day prior to the option’s expiration date during which purchases and sales of options can be made. For equity options, this is generally the third Friday of the expiration month.

Leading Indicators

Leading Indicators

Economic indicators that change before the economy changes.

Leverage

Leverage

It is the ability to hold an investment position of greater value than your equity. When leveraging your investment, you simply deposit a part of the current value of the asset you are investing in.

LIBOR

LIBOR

London Interbank Offered Rate.

LIFFE

LIFFE

London International Financial Futures Exchange.

Limit Order

Limit Order

This term used in Forex trading. Limit orders are commonly used to enter a market and to take profit at predefined levels. Orders to buy are placed below the current market price and are executed when the ask price hits or breaches the price level specified. Limit orders to sell are placed above the current market price, and are executed when the bid price breaches the price level specified.

Liquidity (Liquid Market)

Liquidity (Liquid Market)

A trading environment characterised by high trading volume, a narrow spread between the bid and ask prices, and the ability to trade larger sized orders without significant price changes.

Listed Option

Listed Option

A put or call traded on a national options exchange. In contrast, over-the-counter options usually have non-standard or negotiated terms.

LME

LME

London Metal Exchange

Long

Long

A buy position opened in the expectation that the market price will rise.

Low Option

Low Option

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

LSE

LSE

London Stock Exchange

Margin (Margin requirement)

Margin (Margin requirement)

This term used in Forex trading. Amount currently used to maintain your open positions. In order to keep your open position/s active, ensure that your equity exceeds the maintenance margin level. Otherwise the position will automatically close.

Margin Call

Margin Call

This term used in Forex trading. When your equity falls below the required Maintenance Margin, you are subject to a margin call to remedy the situation. To avoid having your positions closed for you (being stopped out), you must either close or reduce open positions, or send additional funds to cover your positions.

Margin Usage

Margin Usage

This term used in Forex trading. The percentage (of the 100% equity) you are currently using in your open positions. Margin usage = (Used margin/Equity) x100. For example, if your usable margin is $10000, in order to trade safely you need to limit your margin usage for each trade to a maximum of $500.

Market Maker

Market Maker

A recognized institution or individual willing to trade certain securities any time that a trader wants to buy or sell.

Mark To Market

Mark To Market

An accounting process by which the price of securities held in an account are valued each day to reflect the closing price or market quote. As a result the equity in an account is updated daily to properly reflect current security prices.

Market Quote

Market Quote

A quotation of the current best bid / ask prices for an option or stock. This information is usually obtained by the investor from someone at a brokerage firm. However, for listed options and stocks, these quotes are widely disseminated and available.

Model

Model

A mathematical formula used to calculate the theoretical value of an option.

Monetary Policy

Monetary Policy

The procedures by which a government or central bank seek to affect macroeconomic conditions by influencing the supply and availability of money.

MSE

MSE

Milan Stock Exchange

Multiple Listed (Multiple Traded Option)

Multiple Listed (Multiple Traded Option)

Any option contract that is listed and traded on more than one national options exchange. NASDAQ A key index, this was the world’s first electronic stock market, and is traditionally home to many high-tech stocks such as Microsoft, Intel, Dell and Cisco.

Minimum deposit

Minimum deposit

The minimum deposit amount depends on broker. It could be 10 USD, 100 USD or 200 USD … In our brokers reviews you can find this criterion of the broker.

Minimum investment

Minimum investment

The minimum amount to invest in a single option is really depends on the broker. So-called budget- or discount-brokers allow you to invest 1 USD. Brokers with a minimum deposit from 200 USD put a minimum investment around 10 or even 20 USD. We recommend you to discover all conditions before making a deposit.

Net Exposure

Net Exposure

The sum of all your open positions currently traded on the markets.

Neutral

Neutral

An adjective describing the belief that a stock or the market in general will neither rise nor decline significantly.

NYFE

NYFE

New York Futures Exchange

NYMEX

NYMEX

New York Mercantile Exchange

NYSE

NYSE

New York Stock Exchange

NYSE MKT LLC

NYSE MKT LLC

Formerly known as the American Stock Exchange (AMEX)

No Touch

No Touch

The counterpart of the One Touch instrument. With this option, the price of an asset should not reach the target price during the lifetime of the option. If at any time the price of the asset does reach the target price, it will instantly expire ‘out-of-the-money.’

Non-farm Payrolls (NFP)

Non-farm Payrolls (NFP)

One of the US’ most important economic indicators, which measures the employment rate in the country, except for the farming industry. Such release will define a further direction of the American dollar. The data is published on the first Friday of every month.

Offer / Offer Price

Offer / Offer Price

In the options business this means the same as ask / ask price, or the price at which a seller is offering to sell an option or a stock.

OMLX

OMLX

London Securities and Derivatives Exchange

One Cancels Other Order (OCO)

One Cancels Other Order (OCO)

An order stipulating that if one part of the order is executed, then the other part is automatically canceled. Can be useful for investors with limited funds.

One Touch Option

One Touch Option

A binary type in which you predetermine a value (price) the instrument has to touch before expiring.

Open Interest

Open Interest

The total number of outstanding option contracts for a given underlying stock.

Open P&L

Open P&L

It is your total Profits and Losses in all open positions.

Opening Transaction

Opening Transaction

An addition to, or creation of, a trading position. An opening purchase transaction adds call options to an investor’s total position, and an opening sale transaction adds put options.

Option

Option

A contract that gives the owner the right, but not the obligation, to buy or sell a particular asset at a fixed price, the strike price, for a specific period of time until expiration.

Option Period

Option Period

Sometimes referred to as an option’s lifetime, this is the time from when an option contract is created by a writer of that option to the expiration date.

Option Pricing Curve

Option Pricing Curve

A graphical representation of the estimated theoretical value of an option at one point in time, at various prices of the underlying stock.

Option Pricing Model

Option Pricing Model

The first widely-used model for option pricing is the Black Scholes. This formula can be used to calculate a theoretical value for an option using current stock prices, expected dividends, the option’s strike price, expected interest rates, time to expiration and expected stock volatility. While the Black Scholes model does not perfectly describe real-world options markets, it is still often used in the valuation and trading of options.

Option Writer

Option Writer

Also called the option seller, an option seller grants the right to trade a security at a given price in the future.

Optionable Stock

Optionable Stock

A stock on which listed options are traded.

Options Clearing Corporation (OCC)

Options Clearing Corporation (OCC)

A registered clearing agency whose shares are owned by the exchanges that trade listed equity options, OCC is an intermediary between option buyers and sellers. OCC issues and guarantees all listed option contracts.

Order Execution

Order Execution

The order execution tool allows you to determine how your trades will be executed. Since market prices vary, some trade requests don’t receive an approval. And thus, we are thrilled to introduce an additional execution type that ensures your orders are always approved at the best current available price.

OSE

OSE

Osaka Securities Exchange

Over The Counter (Over The Counter Market)

Over The Counter (Over The Counter Market)

A decentralized market, without a central physical location, where market participants trade with one another through various communication modes such as the telephone, email and proprietary electronic trading systems.

Outbound Option

Outbound Option

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

Out of the Money (OTM)

Out of the Money (OTM)

This term means that the market price of the asset is currently trading or has closed and is not profitable.

Owner

Owner

Any person who has made an opening purchase transaction, call or put, and has that position in a brokerage account.

Parity

Parity

When an option’s theoretical value is equal to its intrinsic value, it is said to be ‘worth parity’. When an option is trading for only its intrinsic value, it is said to be ’trading for parity’. Parity may be measured against the stock’s last sale, bid, or offer.

Payout

Payout

In order for the trade to be successful, the actual price at the time of expiry must be in agreement with the direction you anticipated when you entered the position. If you are right in your assessment you receive a pre-determined cash amount upon option expiry termed the “payout”. If you are wrong, you lose the money you placed on the trade.

PIP (Point in Percentage)

PIP (Point in Percentage)

It is the smallest price change that a given exchange rate can make. Since most major currency pairs are priced to four decimal places 0.0001, the smallest change is that of the last decimal.

Platform

Platform

Used by binary options brokers to allow individual traders to execute trades. Although the majority of platforms are similar in many ways, each presents unique features.

Portfolio

Portfolio

Each trader’s collection of financial investments.

Position

Position

An investment in an asset. For example, when you trade (say, UP) USD/JPY, you open a USD/JPY position the minute you click the INVEST (Call/Put/…) button.

Profit

Profit

If the option is closed «in-the-money» (the strike price is higher or lower than expiry price, depending on the type of the option) you get a guaranteed profit, specified in the option.

Profit / Loss Graph

Profit / Loss Graph

A graphical presentation of the profit and loss possibilities of an investment strategy at one point in time, at various stock prices.

Put

Put

This type of option brings income to a trader, when the expiry price of the asset is below the strike price. If the option expires at the strike price, the trader receives back the price of the option (DOWN).

Quote

Quote

The two-way market price that a broker makes for a given instrument. Since it is two-way, you can buy or sell, according to whether you think the price will rise or fall.

Why there are quotes on my platform during the weekend when the markets are closed?

Why there are quotes on my platform during the weekend when the markets are closed?

On weekends, many brokers provide to their clients an opportunity to trade with over the counter instruments. Over the counter deal means a transaction which made directly between two parties without going public.

Range Option

Range Option

The Range option type allows you to decide whether the option will expire within a given price range (upper boarder and lower boarder) or outside the given price range.

RBA

RBA

Stands for Reserve Bank of Australia. The bank is responsible for Australia’s monetary policy, works to maintain a strong financial system and issues the nation’s banknotes.

Real Time

Real Time

A real-time stock or bond quote is one that states a security’s most recent price as opposed to a delayed quote.

Realised Gains & Losses

Realised Gains & Losses

The net amount received or paid when a closing transaction is made and matched together with an opening transaction.

Rebate

Rebate

The amount returned to the trader if a binary option expires out of the money. Typically, the rebate is expressed as a percentage of the investment amount. See also Refund

Resistance

Resistance

A term used in technical analysis to describe a price area at which rising prices are expected to stop or meet increased selling activity. This analysis is based on historic price behavior of the stock.

Resistance Level

Resistance Level

A price level above that it is difficult for a security or market to rise.

Return

Return

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

Refund

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”.

Risk

Risk

Exposure to uncertain change, most often used with a negative connotation of adverse change.

Risk Management

Risk Management

If you are new to trading it is possible to make substantial losses as well as substantial profits. You can manage your risks via controlled risk trades, making it possible to put an absolute limit on potential losses.

Rolling

Rolling

A trading action in which the trader simultaneously closes an open option position and creates a new option position at a different strike price, different expiration, or both.

Rollover

Rollover

Binary Options trading: A feature that might exist in some trading platforms. The Buy Me Time feature allows traders to add time to their open positions and postpone its expiration.

FOREX trading: When a position is held at the end of a business day, it rolls over to the next value date and becomes subjected to a swap charge or credit, based on the interest rate ratio between the two trading currencies. Rollover/swap rates are calculated in points, and are automatically converted into the account base currency.

Running Profit & Loss

Running Profit & Loss

How your open trades are doing: the unrealized money that you would gain or lose on your open trades if they were closed at prevailing market prices.

S&P 500

S&P 500

Is stock index of Standard & Poor’s rating agency which is comprised of 500 top publicly traded companies of the USA which securities can be found on the largest U.S. stock markets. It is a market-value-weighted index and one of the main indicators of the American economic climate.

SAF

SAF

South African Futures Exchange

Scalping

Scalping

is the method of short-term trading that suggests a large number of positions opened during a trading day fixing small amounts of profit or loss

SEC

SEC

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.

Securities

Securities

A financial instrument that represents an ownership position, a creditor relationship, or rights to ownership. Securities include promissory notes, bonds, shares, options, futures, warrants, and certificates.

Sector

Sector

The name for a group of securities or companies in the same market or industry.

Sell

Sell

You ‘sell’ a market if you think it will fall (if you are opening a new trade). You also ‘sell’ to close out an existing ‘buy’ trade.

SFE

SFE

Sydney Futures Exchange

SGX

SGX

Singapore Exchange

Shares

Shares

A unit of ownership, usually in a corporation, that entitles the owner to a share of profits in the form of a dividend.

Short

Short

A sell position opened in the expectation that the market price in that asset will fall.

Slippage

Slippage

The difference between the level of a Stop order and the actual price at which it was executed. Can occur during periods of higher volatility when market prices move rapidly or gap.

SOFFEX

SOFFEX

Swiss Options and Financial Futures Exchange

Spot

Spot

The price for a currency, index, commodity or share for immediate settlement or delivery.

Spread

Spread

The difference between the bid price at which you can sell the trading asset and the ask price at which you can buy the trading asset.

Standard Deviation

Standard Deviation

A statistical measure of price fluctuation. One use of the standard deviation is to measure how stock price movements are distributed about the mean.

Stock Index

Stock Index

A 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.

Stock Exchange

Stock Exchange

The place where shares and stocks or other securities are bought and sold.

Stop Loss Order

Stop Loss Order

This term generally from Forex trading, but in recent time some Binary Options brokers announced them in their Binary Option Trading Platforms. This is a stop order that will execute and close a position to limit losses in case of an adverse market movement. When a stop order is executed, it becomes a market order and is filled as soon as possible at the price obtainable on the market. Note that this price may differ from the price you set for the order (Slippage).

Stop Order

Stop Order

An opening or closing of an order to buy or sell at a worse price, to where the market is currently trading.

Straddle

Straddle

Purchase or sale of an equal number of Puts and Calls with the same terms at the same time.

Strangle

Strangle

Buying or selling an ‘out-of-the-money’ Put option, and Call option on the same instrument, with the same expiration. Profits are made only if there is a drastic change in the instrument’s price.

Strike price

Strike price

It is the price of the asset at the time when the option was purchased.

Support

Support

A term used in technical analysis to describe a price area at which falling prices are expected to stop or meet increased buying activity. This analysis is based on previous price behavior of the stock.

Target Price

Target Price

This term, also known as the market price, is the current price of the asset based on the feed by the data provider.

Technical Analysis

Technical Analysis

A method of evaluating an asset by studying statistical data related to its historical performance, such as past prices and volume. Charts and graphs, in addition to other research tools, are utilized to identify any possible patterns that may be indicators of future activity.

Theoretical Value

Theoretical Value

The estimated value of an option derived from a mathematical model.

Tick

Tick

The smallest unit price change allowed in trading a security. For listed stock and options, this is generally 1/8th of a point. However for a listed option under $3 in price, this is normally 1/16th of a point.

Time frame

Time frame

Refers to the time period of the chart chosen to display the price move on the FOREX market. Time periods in trading platforms include: 1 minute (M1), 5 minutes (M5), 15 minutes (M15), 30 minutes (M30), 1 hour (H1), 4 hours (H4), 1 day (D1), and 1 month (MN). Sometimes abbreviated to TF

Trader

Trader

This refers to any investor who makes purchases and sales. It can be a member of an exchange who conducts his or her buying and selling on the trading floor of the exchange.

Trading Hours

Trading Hours

Each asset has its own trading hours and/or trading days; in addition to holidays.

Trading Pit

Trading Pit

A specific location on the trading floor of an exchange designated for the trading of a specific option class or stock.

Trading strategy

Trading strategy

A system of trading on the market based on a certain approach to market forecasting. The most widespread strategies include trading with the help of Bollinger bands, moving averages, breakthrough of resistance levels, etc.

Trader’s Choice

Trader’s Choice

Sometimes it called as “Trader’s Sentiments”. The trader choice tool allows traders to view other trader’s positions – using it traders can mimic other traders’ behavior.

Trend

Trend

Refers to the movement of a price over a period of time; as the time period of a price movement extends in a continuous direction, it reflects a hype-a trend. Recognition of a trend allows traders to make informed decisions based on the probability of the future direction of assets.

Underlying Asset Types

Underlying Asset Types

The type of asset refers to which financial category each asset falls into. The main asset types that are available to trade in are Stocks, Commodities, Indices and Currencies. Examples of asset types and their assets:
• Stocks: Google Inc, Apple Inc
• Commodities: Gold, Silver, Crude Oil
• Indices: FTSE-100, Nasdaq
• Currencies: USD, GBP, EUR

Value of the option

Value of the option

The value of the option is the price at which a trader acquires an option.

Verification

Verification

By using a strict process of person identification, broker’s Compliance Department ensures that its clients’ funds are protected. For these purposes a broker’s representative will ask you to send the scanned documents. The list of the needful documents for verification will be sent to your e-mail.

Volatility

Volatility

The ability of a particular asset to be inadvertently affected by minor fluctuations that may occur in the financial markets.

Volume

Volume

In reference to Binary Options the cumulative number of contracts traded during a given market session.

Withdrawal

Withdrawal

Process of executing some or all of your funds out of your trading account to reach your desired banking account.