Fundamental terms and definitions:
Call Option: A type of binary option where traders predict that the price of an asset will rise above the strike price at expiration.
Put Option: A type of binary option where traders predict that the price of an asset will fall below the strike price at expiration.
Strike Price: The predetermined price at which the binary option is exercised.
Expiration Time: The specific time and date when the binary option contract expires.
In-the-Money: Refers to a binary option that expires with a favorable outcome for the trader. For a call option, it means the asset price is higher than the strike price. For a put option, it means the asset price is lower than the strike price.
Out-of-the-Money: Refers to a binary option that expires with an unfavorable outcome for the trader. For a call option, it means the asset price is lower than the strike price. For a put option, it means the asset price is higher than the strike price.
At-the-Money: Refers to a binary option where the asset price at expiration is equal to the strike price.
Asset classes and their characteristics:
Stocks: Ownership shares of publicly traded companies, providing potential returns through dividends and capital appreciation.
Currencies (Forex): Trading pairs of different currencies, aiming to profit from fluctuations in exchange rates.
Commodities: Physical goods like gold, oil, natural gas, agricultural products, etc., traded based on supply and demand dynamics.
Indices: Representations of a group of stocks, measuring the overall performance of a specific market or sector.
Types of binary options contracts:
High/Low Options: The most common type where traders predict whether the price of an asset will be higher or lower than the current price at expiration.
One-Touch Options: Traders predict whether the price of an asset will touch or surpass a predetermined target price before expiration.
Boundary Options: Traders predict whether the price of an asset will remain within a specified price range or break out of it.
Ladder Options: Traders predict whether the price of an asset will reach specific price levels (rungs) within a given time frame.
Basic trading instruments and their features:
Digital Options: The simplest form of binary options where traders predict whether the price will be above or below the strike price at expiration.
Turbo Options: Short-term binary options with very short expiration times, ranging from 30 seconds to a few minutes.
Range Options: Binary options where traders predict whether the price will stay within a predetermined range or move outside of it.
