Entering and Exiting Binary Option Trades
When reading a binary option quote, there are several fundamental components that you should understand and identify. These fundamental components are: the underlying asset, the strike price, the expiration time and date, and the bid/offer.
- Underlying asset or market. This component of the quote identifies the underlying asset on which the binary option contract is traded. As you learned in Part Two, binary options can be traded on multiple instruments, including index futures, commodity futures, spot forex, and economic data releases. In the image above, the underlying asset is the March Standard & Poor's (S&P) 500 futures.
- Strike price. The strike price represents the true or false condition relative to the underlying market. More simply put, the strike price is your price target to be achieved or not achieved based on your position (long or short). In the image above, the strike price for this US 500 (S&P 500) binary is 1223.0.
- Expiration time and date. As you have learned, binary options are available with multiple expiration times and dates. The possibilities are weekly options, daily options, and hourly options. This component is critical, based on your trading strategy. In the image above, the expiration ...