Binary options FAQ – Binary options guide

faq option binaireWhat is a «High Option» ?

 A high option is profitable if you chose that the asset price would be higher at expiry than it was at purchase.

Example : At 10 a.m. you buy Vodafone stock valued at 100 euros and anticipate that it will increase by 11 a.m. If it does increase then you earn a profit.

What is a «Low Option» ?

 The opposite of the high option, the low option brings a profit if you anticipated that the asset’s expiry price would be lower than the purchase price.

Example : At 10 a.m. you buy Vodafone stock valued at 100 euros and anticipate that it will decrease by 11 a.m. If it does decrease then you earn a profit.

 

What is «out of the money» ?

When dealing with a high option, «out of the money» means that the the asset price exired below the initial purchase price. With a low option, «out of the money» means that the asset price expired above the initial purchase price. Both situations result in a loss for the investor.

 What is «in the money» ?

When dealing with a high option, «in the money» means that the asset price expired above the initial purchase price. With a low option, it means that the asset price expired below the initial purchase price. Both situations result in significant profits for the investor.

 What is «at the money» ?

 In this situation the asset price stayed the same. The total amount of your purchase price is returned.

 What is the expiry time?

 The expiry time occurs once the option is finished with an «in the money» or «out of the money» result.

 What is the expiry date?

 The expiry date occurs once the option is finished with an « in the money » or « out of the money » result.

 How do I close an option befory expiry ?

Call options can be closed before the expiry time at which they are marked with «no more trades.» It is possible to close an option for a few minutes from the time the purchase was made. (The closure option is not always available on all options.)

What is the difference between PUT and CALL ?

Put option: For use in an option that anticpates a profit when the underlying asset decreases in value when compared to the initial value. If the option expires at the same price, the value of the original investment is returned.

 Call Option: For use in an option that anticipates a profit when the underlying asset increases in value when compared to the initial value. If the option expires at the same price, the value of the original investment is returned.

 What is the option target price ?

The option target price is calculated by the financial data supplier. It is the price at which the broker will sell the option.

What does option expiry mean?

Option expiry means the time and date upon which the option will expire. It is important to note that the investor’s time zone is automatically taken into account within the expiry.

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