You will learn about the following concepts
- Meaning and specifications
- Only two possible outcomes
- Simple and yet, effective
New horizons for trading
The next term we would like to explain is expiration in-the-money. In the previous articles we explained that expiration time is the moment when the binary option expires and the assets current price is compared to the strike price. You win, if you have guessed correctly whether the current price at the moment of expiry will be higher/lower than the strike price. Respectively, you lose if wagered wrong.
When you trade binary options, there are only two possible outcomes. In this scenario, your part as a trader is to predict whether the asset’s price will fall or rise through the pre-determined expiration time. For example, if you think that the price will go higher by the time of expiry and you turn out to be right, then the option will achieve an “expiration in-the-money”. Respectively, if the price goes down, the option will have an “expiration out of the money”.
For example, let us assume that you want to place a bid after analyzing the price movements of Nikes shares. Its current price is, say 75$, but you think that after 1 hour (your expiration time), it will have risen above its present value. In this case, you will want to purchase a call option. If you are right and the price has jumped to $76 in 1 hour (your expiration time), the outcome will be expiration in-the-money.
Simple and yet, effective
This is how simple it is! You might encounter some slight difficulties until you master the techniques of analysis, but once you overcome them, you will not have any problems with binary options trading. Each trader, both novice and experienced one, should invest as much time as possible in expanding his knowledge about in the matter. This will help you gain a competitive edge and confidence required to become a successful trader.