Binary options glossary and terms
This is the financial instrument on which your binary option or spread is based. Assets are sometimes binary options glossary and terms markets. Asset classes included forex, stock indices, and commodity futures. Bearish traders or traders with a bearish opinion believe a market will go down. Bullish means you believe a market will go up. Bearish and bullish are sometimes used to describe markets or trends themselves.
A broker places trades to the exchange on behalf of the client. Some brokers also advise or help clients place trades. Commodities are actual things that are usually consumed and binary options glossary and terms, including metals like gold and silver, grains like corn and soybeans, and fuels like crude oil and natural gas. Various factors including supply, demand, weather, and political unrest can affect their prices.
Nadex offers binary options on these and other commodities. Currencies of advanced economies are exchanged for each other based on prices that constantly fluctuate. The currency market is commonly called forex, short for foreign exchange. Nadex offers free, real-time price data.
Most providers either binary options glossary and terms delayed prices or charge exchange fees to their customers for real-time data. This means all Nadex underlying indicative markets reflect the actual price being traded at that instant. The point in time at which the Expiration Value is calculated. For most Nadex contracts, exchange binary options glossary and terms can leave orders to trade right up until this point. However, please note that some Events markets may close prior to Expiration.
The calculated level of the underlying market at Expiration, as determined by Nadex except for Economic Events where it is determined by the relevant source agency. Nadex uses different calculation procedures for normal and highly active markets, to ensure an accurate binary options glossary and terms outcome.
If this would result in a non-integer number of prices, we will round down to the nearest integer the number of prices to be removed. We then average the remaining midpoint prices and round to one decimal point past the precision of the underlying market. We then average the remaining trade prices and round to one decimal point past the precision of the underlying market except for the Wall Street 30 which will be rounded to the point of precision of the underlying market.
If it takes more than ten seconds to collect 10 or more midpoints in the data set, Nadex calculates the expiration values for spot FX as follows:. If it takes more than ten seconds to collect 25 or more trades in the data set, Nadex uses the following process to calculate the expiration value:. The market prices we use to calculate the expiration values for index and commodities contracts are obtained through a data feed from Reuters.
If Reuters is unavailable, we may obtain market pricing data through Bloomberg or another data provider that we deem appropriate under the circumstances. The market prices we use to calculate the expiration values for Forex contracts are obtained through a proprietary data feed "NadexFX" comprised of quotes from well-known banking institutions. If NadexFX is unavailable, we may obtain market pricing data through Bloomberg or another data provider that we deem appropriate under the circumstances.
The lower and upper limits against which the expiration value is compared in order to produce the Settlement Value. The Settlement Value cannot be below the Floor or above the Ceiling. The binary options glossary and terms between the Floor and Ceiling values.
It reflects the overall value of that sector. Another term used interchangeably with "asset" and "market", which can refer binary options glossary and terms underlying stock indices, commodities, forex pairs, or, in the case of economic event binaries, the economic number reported by the government agency.
The calculated price level of the underlying market, as determined by Nadex in a continuously updated calculation. Nadex obtains its underlying market data from a proprietary data feed compiled using data from ten major banks.
Prior to expiration, the option binary options glossary and terms have a variable value based on how close it is to the strike price. At expiration, a binary option contract is settled and determined to be in, at, or out of the money. The settlement value factors in the floor and ceiling levels of spreads to decide what the profit or loss will be for that spread contract.
Binary options must have a settlement value of either 0 or Spreads must have a settlement value no lower than their floor level and no higher than their ceiling level. The strike price is the price level you think the market will be above or below at expiration. If you think the market price expiration value will be above the strike, you buy the option. If you think the binary options glossary and terms will be at or below the strike price, you sell the option.
The market's price at expiration is compared to the strike price to determine whether your binary option has settled in, at, or out of the money. In the case of economic events contracts, the publisher of the expiration value. The maximum aggregate position that any person can hold or control in any particular contract class.
These are sometimes needed to prevent mistakes. The amount the market price must move for the price to move up or down one tick in value. Many markets have fractional tick sizes. For example, a tick size of binary options glossary and terms. Other markets have more complicated tick values, dating back to older pricing traditions, such as bushels and ounces. Sometimes tick size and tick value are used interchangeably, especially when both values are one, as in the case of Nadex contracts.
On Nadex, trading days start the previous evening and continue through the full trading day that follows it. Trading days always start at 6: They continue without interruption until 5: The times of day during which the contract will be binary options glossary and terms for trading on the exchange.
Most Nadex contracts are open 23 hours a day, 6 days a week. See the specific contract details for exact information. The source market that expiration values are based on. Fill out our online application in just a few binary options glossary and terms. Home Learning Center Glossary. Trading Day Open Close Monday 6: Get Started Fill out our online application in just a few minutes.
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