Binary Trading Facts 3

Question 1

What characteristic makes binary options different from traditional vanilla options?

Accepted Answer

Fixed payout and all-or-nothing outcome

Answer

Ability to exercise early at any price

Answer

Unlimited profit potential

Answer

No expiration date

Question 2

If a binary option costs $40 on Nadex and finishes in the money, what is the trader's gross profit?

Accepted Answer

$60

Answer

$40

Answer

$100

Answer

$140

Question 3

What does 'expiry time' refer to in binary options trading?

Accepted Answer

The moment the contract settles and outcome is determined

Answer

The time the market opens

Answer

The deadline to deposit funds

Answer

The broker's trading hours

Question 4

Many unregulated offshore binary options brokers have been associated with what problem?

Accepted Answer

Fraud and refusal to return funds

Answer

Excessive regulatory paperwork

Answer

Overly conservative payouts

Answer

Mandatory long-term holding

Question 5

A 'put' (or 'low') binary option is profitable when the underlying price does what at expiry?

Accepted Answer

Settles below the strike price

Answer

Settles above the strike price

Answer

Equals the strike exactly

Answer

Has high trading volume

Question 6

What underlying markets can binary options commonly be based on?

Accepted Answer

Forex, indices, commodities, and stocks

Answer

Only real estate

Answer

Only government bonds

Answer

Only cryptocurrencies

Question 7

What is the term for the price of a binary option, which also reflects its implied probability of finishing in the money?

Accepted Answer

Premium

Answer

Strike

Answer

Spread

Answer

Margin