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What Does Binary Option Mean? Asset-or-nothing This option enables investors to guess the direction of movement above or below of an asset. The above or below options give the investor a strike price in which he will speculate as to whether the market will be above or below that level strike price at a specific date. Barriers option A barrier option, which is also known as a one-touch option is an option where the payoff is triggered by the price of the underlying asset hitting a specific level.

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Binary options depend on the outcome of a "yes or no" proposition, hence the name "binary. At the time of expiry, the price of the underlying asset must be on the correct side of the strike price based on the trade taken for the trader to make a profit. A binary option automatically exercisesmeaning the gain or loss on the trade is automatically credited or debited to the trader's account when the option expires.

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Pros and cons of binary options trading Definition of a binary option A binary option is a type of ordinary option, based on the fulfillment of a certain condition at a certain time, allowing you to earn on the forecasts of changes in asset prices. In fact, a binary option is a convenient financial tool for earning money on price speculation. It is allocated with a fixed value, that is, the holder of the option will receive exactly as much as was agreed in advance.

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Expiration Rate in Binary Options Asset — this is the underlying stock, commodity, currency pair or index, on which the binary option is based. Binary option —this term contains excessive information that cant be explained in just a few words. Basically, the binary option can be explained as way of online investment for a fixed return with an expiration period, which is also fixed.

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Further Reading Terms associated with binary options trading explained. Binary Options, as with many forms of trading, has many unique words and phrases that may not be familiar to investors new to this form of investment. Here we have tried to collate as many of those binary option terms as possible, and listed them in our glossary alphabetically.

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Regulation and fraud[ edit ] Further information: Securities fraud Many binary option "brokers" have been exposed as fraudulent operations. Manipulation of price data to cause customers to lose is common. Withdrawals are regularly stalled or refused by such operations; if a client has good reason to expect a payment, the operator will simply stop taking their phone calls.

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