Why Do OTM Options Still Have a Non-Zero Premium? ⎊ Path

Why Do OTM Options Still Have a Non-Zero Premium?

OTM options have a non-zero premium because they possess time value. This time value reflects the possibility that the underlying asset's price will move favorably before expiration, turning the option ITM.

As long as there is time remaining, there is a chance of profit, hence the non-zero premium.

Can an OTM Option Ever Have a Higher Time Value than an ITM Option?

What Is the Main Reason an OTM Option Still Has Value?

Why Does an ITM Option Have a Higher Premium Compared to an OTM Option with the Same Expiration?

Define In-The-Money (ITM) for Both a Call and a Put Option

What Type of Option Buyer Primarily Focuses on OTM Options?

How Does the ‘Moneyness’ of an Option Affect Its premium’S’extrinsic Value’?

What Is the Primary Value Component of a Deep ITM Option?

How Does an ITM Call Option Differ from an “Out-of-the-Money” (OTM) Call Option?