Binary Trading Binary Options Types and Structures 1

Question 1

What is a 'Call' option in binary trading?

Accepted Answer

An option that profits when the asset price rises above the strike price at expiry

Answer

A Call option in binary trading is profitable when the underlying asset's price closes above the strike price at the time of expiry.

Question 2

What does a 'Put' option represent in binary trading?

Accepted Answer

A prediction that the asset price will fall below the strike price at expiry

Answer

A Put option profits when the underlying asset's price closes below the strike price at expiry, representing a bearish prediction.

Question 3

Which binary option type pays out if the asset price touches a specific target level at any point before expiry?

Accepted Answer

One Touch option

Answer

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.

Question 4

What is a 'boundary' or 'range' binary option?

Accepted Answer

An option that profits if the price stays within or exits a defined price range at expiry

Answer

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.

Question 5

In a 'High/Low' binary option, what must happen for a 'High' (Call) trade to expire in the money?

Accepted Answer

The asset price must close higher than the strike price at expiry

Answer

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.

Binary Trading Practice Test

Binary Trading Practice Test

Binary Trading Binary Options Types and Structures 1