Out of the Money (OTM)
Also called: otm
An option that has no value if exercised right now.
A call is out of the money when the stock is below the strike; a put is out of the money when the stock is above the strike. Out-of-the-money options are made entirely of time value, so they lose value as expiration approaches if the stock does not move their way. Most premium sellers sell slightly out-of-the-money options on purpose.
For example
With a stock at $48, a $50 call is out of the money by $2. If the stock never reaches $50, that call expires worthless.
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