Our binary trading glossary is the easiest way to learn about binary option terminology and increase your knowledge about the markets. The glossary lists the most common binary option terms in use on the K2 Investing and in the general binary option industry.
If you have any questions or concerns not addressed in our binary glossary, please visit our Education Center for additional information.
At the money: Used when the market price of the asset is currently trading at or has closed at the exact target price. Meaning that the trade was neither profitable nor loss making hence the invested amount will be returned.
Binary Option: A term that refers to a specific type of financial instrument that offers a fixed rate of return that is predetermined before the investment is made. Click to learn more.
Boundary Instrument: A type of binary option in which the trader decides whether the market price at the time of expiry will be within a price range or outside of that set range.
Early Closure: This is a feature on the K2 Investing platform that allows a trader to close a position before the expiry time.
Expiry Level/Price: This is the level/price of the option at the time of the expiry. This is calculated with the bid+ask/2 and the bid and ask prices are based on the price feed received by the Liquidity providers.
Expiry Time: The time and date at which an option expires.
High Option: A binary option type in which the trader believes the market price of an asset will expire above the current market price.
High/Low Instrument: A binary option in which a trader can decide if the asset’s market price will expire higher or lower than the current market price.
Inbound Option: One possibility of the boundary option. The trader decides if the market price will expire inside the predetermined price range.
Investment Amount: The amount of capital invested in an individual binary option.
In the Money: This term means that the particular option is currently profitable.
Low Option: A binary option in which the trader believes the market price of an asset will expire below the current market price.
Market Price (before execution): Represents the mid-price (“closing price”) of the underlying Asset at the last tick before the execution of your trade. Taking into consideration market conditions and the Company’s Best Interest and Execution policy, the Market Price and the Target Price may match. The market price might change until the point of execution due to normal market conditions.
Market Price (after execution): Represents the mid-price of the underlying Asset.
No Touch Option: A binary option trade in which the trader decides if the market price will not reach a predetermined price through the life of the option.
One Touch Instrument: A binary option trade in which the trader decides if the market price will reach a predetermined price through the life of the option.
Out of the Money: This term means that the particular trade is currently not profitable.
Outbound Option: One possibility of the boundary option, the trader decides if the market price will expire outside the predetermined price range.
Return: The return is the percentage of the original investment that the trader will receive if the investment is profitable.
Target Price or Strike Price: For High/Low options this is the price at which an option was executed by the liquidity provider and can take a value between the bid and ask price range. For additional information please see the “Interest and Order execution policy”.
Touch Option: A Touch Option is a binary option that will expire in the money if the market price at any time during the life of the option reaches a predetermined level.
Underlying Asset: The asset in which the trader is invested in the binary option.
Underlying Asset Types:
Stocks (e.g. Google, British Airways)
Commodities (e.g. Gold, Brent Crude)
Indices (e.g. NASDAQ, FTSE 100)
Currencies (e.g. EUR/USD)