What Is the Definition of an “Out-of-the-Money” Option?
An option is "out-of-the-money" (OTM) if exercising it immediately would result in a loss or zero profit. For a call option, the strike price is above the current underlying asset price.
For a put option, the strike price is below the current underlying asset price. OTM options have zero intrinsic value and consist entirely of extrinsic (time) value.
