Binary Options Types and Structures Flashcards
7 cards from real Binary Trading practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Binary Options Types and Structures flashcards as text
What is a 'Call' option in binary trading?
Answer: An option that profits when the asset price rises above the strike price at expiry
A Call option in binary trading is profitable when the underlying asset's price closes above the strike price at the time of expiry.
What does a 'Put' option represent in binary trading?
Answer: A prediction that the asset price will fall below the strike price at expiry
A Put option profits when the underlying asset's price closes below the strike price at expiry, representing a bearish prediction.
Which binary option type pays out if the asset price touches a specific target level at any point before expiry?
Answer: One Touch option
A One Touch option pays out as soon as the asset price touches the predetermined target level at any point during the option's lifetime, before expiry.
What is a 'boundary' or 'range' binary option?
Answer: An option that profits if the price stays within or exits a defined price range at expiry
A boundary (range) binary option pays out if the asset price either stays within (in-range) or breaks outside (out-of-range) a specified price corridor at expiry.
In a 'High/Low' binary option, what must happen for a 'High' (Call) trade to expire in the money?
Answer: The asset price must close higher than the strike price at expiry
In a High/Low binary option, a High (Call) trade is in the money when the asset's closing price at expiry is above the strike price set at the time of purchase.
What is the maximum possible profit structure on a typical binary option trade?
Answer: A fixed percentage of the investment, predetermined before the trade
Binary options offer a fixed, predetermined payout percentage (typically 70–95% of the investment) regardless of how much the price moves in your favor.
What does 'Out of the Money' (OTM) mean for a binary option at expiry?
Answer: The asset price did not meet the condition required for a payout at expiry
Out of the Money means the trade's conditions were not met at expiry (e.g., for a Call, the price finished below the strike), resulting in the loss of the invested amount.