Glossary List
At-the-Money
One of three terms used to describe an option’s current status in terms of its ability to generate profit. At-the-money refers to a situation in which the option’s target price is identical to the underlying asset’s price. If an option expires in this status, the investment amount will be returned.
Binary Option
The assets used in a specific type of market trading that offers a fixed pay-out for the correct prediction of simple yes/no propositions. For example, a typical binary option would ask if the underlying asset, such as Gold, would rise or fall in value and offer an 81% return for a correct prediction.( Also known as all-or-nothing, digital and exotic options.)
Boundary Instrument
A tool used in trading binary options whereby a trader must try to predict if the underlying asset will reach a value that is within or out of a specified range of values when the option expires.
Early Closure
A feature offered by optionFair that allows traders to exit an option prior to the decided expiration time for a reduced return.
Expiry Level
Refers to the underlying asset’s value once the option expires.
Expiry Time
The specific predetermined hour and date when the time allotted for estimating the direction of an assets market value closes.
High Option
An option on a High/Low instrument offering a fixed return of up to 91% return if the underlying asset expires at a higher level than the option target price.
High/Low Instrument
A binary options trading instrument in which a trader must predict if the underlying asset will reach a value that is above or below the strike price when the option expires.
In-the-Money
One of three terms used to describe an option’s current status in terms of its ability to generate profit. “In-the-money” refers to a situation in which the underlying asset’s value will generate profit. For example, when selecting “high” on the high/low instrument, the option will be “in-the-money” if the underlying asset’s price is above the target price.
Investment Amount
The amount of capital invested in a single binary option.
Market Price
The current value of an underlying asset.
No Touch Option
An option on a One Touch instrument typically offering a return up to 91% if the underlying asset does not reach the target price during the lifetime of the option. Note: Should a No Touch option reach the target price at any time during the lifetime of the option then the option automatically and immediately expires “Out of the money”.
One-Touch Instrument
A binary options trading instrument in which a trader must predict if the underlying asset will touch a specific value prior to expiration or not.
Out-of-the-Money
One of three terms used to describe an option’s current status in terms of its ability to generate profit. “out-of-the-money” refers to a situation in which the underlying asset’s value is such that it will not generate profit. For example, when selecting “high” on the high/low instrument, the option will be “out-of-the-money” if the underlying asset’s price is below the target price.
Return/ Return on Investment (ROI)
The amount given back to the investor once an option expires “in-the-money”. For example, if investing €1,000 in an option that offers an 91% return, the trader will receive €1,910 in returns (€910 in profit) if the option expires “in-the-money”.
Target Price
(Also known as the strike price). A term representing the value that an underlying asset must reach in order for an option to end “in-the-money”. For example, when using the “one touch” instrument and selecting “touch”, the option will end “in-the-money” if the underlying asset touches the target price.
Underlying Asset
The asset (see underlying asset types) on which optionFair™ is writing an option.
Underlying Asset Types
An ownable, and thus trade-able, entity that can be categorized in one of the following: Stocks, Commodities, Indices and Currencies. For full details of the assets available on optionFair please see the Asset Index page.
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