What Does “Out-of-the-Money” Mean for a Put Option?
A put option is "out-of-the-money" (OTM) when the current price of the underlying asset is higher than the option's strike price. The holder of a put has the right to sell the asset at the strike price.
If the market price is higher, exercising the put would result in a loss, so its intrinsic value is zero. The entire premium of an OTM put is composed of time value.
