Binary Options at Unifunds are available on a variety of assets, which includes assets, commodities, indices and currency pairs. It is important to remember that traders are not purchasing and do not own any of underlying assets but are only speculating on the price direction of the asset.
Binary Option positions are divided into “Call” and “Put”. If the trader believes that the asset price will rise, he would place the asset in the “Call” position. In contrast, if the trader believes that the asset price will fall, he would place the asset in “Put”. If the asset price increased at the expiration of a Call, the trader will profit. To profit from a Put, the price of the chosen asset must decrease by the expiration time.
If the trader accurately predicts the direction of the asset value, he is paid a fixed profit regardless of the degree of increase or decrease. If the trader incorrectly predicts the asset value direction, he loses the amount that was bid.
- Payoff – The monetary value gained or lost from a trade.
- Expiration (Expiry Time) – Refers to the deadline where the payoff is determined by judging the underlying asset value against the initial price. Upon expiration, the Binary Option ceases to trade and becomes void.
- Strike Price – The price of the underlying asset at the time of bidding determines the strike price.
- Expiry Price (Expiration) – The price when an option closes and is used to determine whether the option closed in or out of the money.
- Target Price – Refers to the predicted price that the Binary Option will reach.