What is a financial option?
A binary option, also referred to as a digital option or an all-or-nothing option, is an option in which pay-out is determined at the onset of the contract. The trader receives a fixed amount of return if the option expires in-the-money, irrespective of how much the price of the underlying asset has moved. The trader never actually owns the asset. It is the security upon which an options’ contract is based.
What is an asset?
Asset is a commodity, index, stock, or currency pair that can be traded as a binary option.
What is the strike price?
The strike price is the price of the asset at the time of the purchase of the option.
What is a call option?
A call option is an option that provides the trader with a predetermined profit when the underlying asset at the time of expiration is higher that at the time it was purchased.
What is a put option?
A put option is an a option that provides the trader with a predetermined profit when the underlying asset at the time of expiration is lower than when it was purchased.
What is the option value?
The option value is the price at which a trader acquires an option.
How much profit can I get?
If the option is closed “in-the-money” (the strike price is higher or lower than the expiration price, depending on the type of the option), you get a guaranteed profit specified in the option.
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