A High Low Instrument designates a binary option which gives traders the choice of speculating on whether an underlying asset’s expiry level will be higher or lower than the strike rate. This Instrument is most commonly known by its aforementioned title but can also be called ‘Call’ (High) or ‘Put’ (Low).
The level at which a binary options position expires will determine whether the trade is In The Money, Out Of The Money, or At The Money – depending on whether the trader has placed a High or Low option.
For example, when trading binary options and more specifically a High Low Instrument, if one places a High Option on EUR/USD with a strike price of 1.3634 and the option expires at 1.3636, the trade is In The Money and is therefore profitable. If one places a Low option with the same strike price and the expiry level is the same, the trade is Out Of The Money.
If the trader trades a High Low Instrument, places a High option, and the strike price and current market price are identical, the trade is therefore At The Money, resulting in neither a win nor a loss.