Essentials 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 Essentials flashcards as text
What are the only two possible outcomes of a binary option at expiry?
Answer: Fixed payout or total loss of the stake
A binary option pays a fixed amount if it finishes in-the-money, or the trader loses the staked amount.
In a 'high/low' binary option, what is the trader predicting?
Answer: Whether price will be above or below the strike at expiry
High/low options only require predicting direction relative to the strike price at expiry.
What does 'in-the-money' mean for a binary call option?
Answer: Price finished above the strike
A binary call is in-the-money when the underlying price is above the strike at expiry.
What is the 'strike price' in a binary option?
Answer: The reference level that determines win or loss
The strike price is the threshold the underlying must finish above or below to win.
Why are binary options often described as 'all-or-nothing' instruments?
Answer: The payout is fixed and the loss is the full stake
Because you either receive the fixed payout or lose your entire stake, with no in-between.
What typically determines a binary option's expiry?
Answer: A preset time chosen when the trade is opened
Binary options have a fixed expiry time set at the moment the position is opened.
What is the underlying asset in a binary option?
Answer: The market the option's outcome is based on, like a stock or currency pair
The underlying asset is the stock, index, commodity, or currency pair whose price decides the outcome.