Out Of The Money (OTM)
Definition of 'Out Of The Money (OTM)'
For call options, an out-the-money option would have a strike price that is above the current price of the underlying security. For example, if you held a call option for IBM with a strike price of $50 and IBM was trading at $48 then your call option will be out-the-money.
For puts, an out-the-money option, is one where the strike price is below the current price of the underlying security. For example, if IBM were trading at $48 and your put option had a strike price of $45 then it would be out-the-money.
Do you have a trading or investing definition for our dictionary? Click the Create Definition link to add your own definition. You will earn 150 bonus reputation points for each definition that is accepted.
Is this definition wrong? Let us know by posting to the forum and we will correct it.