Binary options glossary and terms
Bearish and bullish are sometimes used to describe markets or trends themselves. A broker places trades to the exchange on behalf of the client. Some brokers also advise or help clients place trades. Commodities are actual things that are usually consumed and used, including metals like gold and silver, grains like corn and soybeans, and fuels like crude oil and natural gas. Various factors including supply, demand, weather, and political unrest can affect their prices.
Nadex offers binary options on these and other commodities. Currencies of advanced economies are exchanged for each other based on prices that constantly fluctuate. The currency market is commonly called forex, short for foreign exchange.
Nadex offers free, real-time price data. Most providers either provide delayed prices or charge exchange fees to their customers for real-time data. This means all Nadex underlying indicative markets reflect the actual price being traded at that instant.
The point in time at which the Expiration Value is calculated. For most Nadex contracts, exchange members can leave orders to trade right up until this point. However, please note that some Events markets may close prior to Expiration. The calculated level of the underlying market at Expiration, as determined by Nadex except for Economic Events where it is determined by the relevant source agency.
Nadex uses different calculation procedures for normal and highly active markets, to ensure an accurate settlement outcome. If this would result in a non-integer number of prices, we will round down to the nearest integer the number of prices to be removed. We then average the remaining midpoint prices and round to one decimal point past the precision of the underlying market. We then average the remaining trade prices and round to one decimal point past the precision of the underlying market except for the Wall Street 30 which will be rounded to the point of precision of the underlying market.
If it takes more than ten seconds to collect 10 or more midpoints in the data set, Nadex calculates the expiration values for spot FX as follows:. If it takes more than ten seconds to collect 25 or more trades in the data set, Nadex uses the following process to calculate the expiration value:. The market prices we use to calculate the expiration values for index and commodities contracts are obtained through a data feed from Reuters.
If Reuters is unavailable, we may obtain market pricing data through Bloomberg or another data provider that we deem appropriate under the circumstances. The market prices we use to calculate the expiration values for Forex contracts are obtained through a proprietary data feed "NadexFX" comprised of quotes from well-known banking institutions. If NadexFX is unavailable, we may obtain market pricing data through Bloomberg or another data provider that we deem appropriate under the circumstances.
The lower and upper limits against which the expiration value is compared in order to produce the Settlement Value. The Settlement Value cannot be below the Floor or above the Ceiling.
The distance between the Floor and Ceiling values. It reflects the overall value of that sector. Another term used interchangeably with "asset" and "market", which can refer to underlying stock indices, commodities, forex pairs, or, in the case of economic event binaries, the economic number reported by the government agency.
The calculated price level of the underlying market, as determined by Nadex in a continuously updated calculation. Nadex obtains its underlying market data from a proprietary data feed compiled using data from ten major banks.
Prior to expiration, the option will have a variable value based on how close it is to the strike price. When positive delta options and negative delta options offset each other to produce a position which neither gains nor decreases in value as the underlying stock moves slightly up or down. A financial instrument whose value is derived in part from the value and characteristics of another financial instrument. Examples of derivatives are options and futures. To invoke the right granted under the terms of a listed options contract.
The holder is the one who exercises. Call holders exercise to buy the underlying security, while put holders exercise to sell the underlying security. The price at which the option holder may buy or sell the underlying security, as defined in the terms of his option contract.
A physical or electronic document that has intrinsic monetary value or transfers value. For example, cash, shares, futures, options and precious metals are financial instruments. This is the amount needed as available trading resources in your account in order to open a position.
A put option that has a strike price higher than the underlying future price, or a call option with a strike price lower than the underlying futures price. The value of an option if it were to expire immediately with the underlying stock at its current price. The last day on which you can open or close a trade in a particular market.
The last trading day is not the same as the expiry date. A technique to multiply gains and losses. Most often used when buying more of an asset with borrowed funds. The deposit or available credit needed on your trading account in order to keep your positions open. A call from the credit department for further funds to be deposited in the account to support additional exposure from running losses. A financial derivative instrument that gives the right to purchase call or sell put a fixed amount of stock at a specified price and within a certain time limit.
Also called the option seller, an option seller grants the right to trade a security at a given price in the future.