Expiration In the Money

This tutorial continues with the part where we pay more detailed attention to some of the terms you will often encounter while trading binary options. It is always better to be prepared and know what a certain term means, rather than just looking at it and wondering whether it is important, or not. Remember that everything in binary options is important and the greater your knowledge is, the better. As a matter of fact, there are many traders, who lack any trading skills and this is why they have been on a “black” row. This term is used when a loss after loss is coming and sooner or later your initially invested funds will come to an end.

Of course, there is hardly a person, who would want this to happen; so, in order to make everything right and be sure that you have everything it takes to become a successful binary options trader, you must make sure that you've learned and mastered every single one of those terms. Then, and only then, you will have what it takes to start with your first trade – otherwise, your binary options trading will be nothing more than pure gambling; and since binary options trading is an art and there are lots of strategies, it is everything else, but not a gambling!

New horizons for trading

The next term we would like to explain is expiration in-the-money. We guess that those two – the words “expiration” and “in-the-money”, are terms you already know, but in case you can’t remember, let us refresh your memory. The expiration time is the time when the asset will close, and it is one of the key factors because it determines your outcome. You win, if you have guessed the right moment of the asset when the expiration comes and the bid is closed. Respectively, you lose if you haven’t done that. The “in-the-money” term is used in binary options trading pretty often, and it means a win, while “out-of-the-money” means a loss. Now let’s see what the combination of those two factors means.

The flexibility of binary options trading provides numerous opportunities for trading, because there are always markets open, no matter what your local time is. By having such a range of options you also have the chance to generate huge profits and respectively, to have expiration in-the-money.

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 by the predetermined time, which is also known as expiry time. For example, if you think that the price will go higher by the time of the expiry and you turn out to be right, then the option will achieve “expiration in-the-money”, because you will win. Respectively, if you assume that the price will go lower, the option will get “expiration out of the money”, but we will provide you with more information on that topic later.

We know that theory might be found a bit hard to understand by beginners and this is exactly why we would like to give you a brief example. It will make things easier and you will get an idea how things are done with binary options trading. Let’s say you want to place a bid and after analyzing the situation you have decided to pick up the Nike stock (NYSE:NKE).

Its current price is 75$, but you think that after 1 hour (your expiration time), it will close above its current value. In such case, you will want to place a call option. The call option is a strategy in binary options when the investor believes the price will go higher. If you are right and if the price is actually higher after 1 hour (your expiration time), your outcome will naturally 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 analyze, but once you do so, you will not have any problems with binary options trading. Keep in mind that it is always recommended for new traders to invest as much time as possible in learning more about binary options. This will give you the knowledge necessary to help you gain enough confidence and start trading with real money. Is it possible to trade without making an investment of real money? Yes – it is! This topic will also be covered later. All you need to know at the time being is how you are supposed to tell when your expiration is in-the-money and when out-of-the-money. Remember that by having good background knowledge you are making the first step towards becoming a successful binary options trader. After all, this is exactly why you are here, right?