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How Does the Distance from the Strike Price Affect an OTM Option’s Premium?

The further the strike price is from the market price, the lower the OTM option's premium due to a decreased probability of profitability.
Greeks.Live29.10.25

How Does the Distance from the Strike Price Affect an OTM Option’s Premium?

The further an out-of-the-money (OTM) option's strike price is from the current market price, the lower its premium will be. This is because the probability of the underlying cryptocurrency's price moving far enough to make the option in-the-money by expiration decreases with distance.

The premium of a far OTM option is almost entirely composed of a small amount of time value, reflecting the low probability of a significant price swing.

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