out-of-the-money option

out-of-the-money option
An option with no intrinsic value, i.e., a call whose strike price is above the current futures price or a put whose strike price is below the current futures price. Chicago Board of Trade glossary
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A call option is " out of the money" if the strike price is greater than the market price of the underlying security. That is, you have the right to purchase a security at a price higher than the market price, which is not valuable. A put option is out of the money if the strike price is lower than the market price of the underlying security. Bloomberg Financial Dictionary

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out-of-the-money option out-of-the-money option option

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out-of-the-money option UK US noun [C]
STOCK MARKET an option (= right to buy or sell shares, etc.) which has no value because the shares, etc. can be only be bought for above their present price, or sold for less than their present price: »

The best time to buy an out-of-the-money option is when you expect market volatility to increase.

Compare AT-THE-MONEY OPTION(Cf. ↑at-the-money option), IN-THE-MONEY OPTION(Cf. ↑in-the-money option)

Financial and business terms. 2012.

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Look at other dictionaries:

  • Out-of-the-money option — A call option is out of the money if the strike price is greater than the market price of the underlying security. A put option is out of the money if the strike price is less than the market price of the underlying security. The New York Times… …   Financial and business terms

  • out-of-the-money option — See in the money option …   Big dictionary of business and management

  • out of the money — An option with no value. A call option is out of the money when the strike or exercise price is above the price of the underlying security. Similarly a put option is out of the money when the exercise price is below the price of the underlying… …   Law dictionary

  • out-of-the-money — An option with no value. A call option is out of the money when the strike or exercise price is above the price of the underlying security. Similarly a put option is out of the money when the exercise price is below the price of the underlying… …   Law dictionary

  • out of the money — The situation where an option has only time value as opposed to intrinsic value because of the relationship between the option s strike price and the current market price for the underlying instrument, the spot price. A call option is out of the… …   Financial and business terms

  • out-of-the-money — A call is out of the money when the strike price is above the underlying futures price. A put is out of the money when the strike price is below the underlying futures price. The CENTER ONLINE Futures Glossary The situation where an option has… …   Financial and business terms

  • Out of the money —   An option contract is out of the money when there is no benefit to be derived from exercising the option immediately. A call option is out of the money when the price of the underlying is below the option s exercise price.   A put option is out …   International financial encyclopaedia

  • in-the-money option — An option having intrinsic value. A call option is in the money if its strike price is below the current price of the underlying futures contract. A put option is in the money if its strike price is above the current price of the underlying… …   Financial and business terms

  • at-the-money option — An option with a strike price that is equal, or approximately equal, to the current market price of the underlying futures contract. Chicago Board of Trade glossary ( ATM option) The option with the exercise price closest to the current price of… …   Financial and business terms

  • in-the-money option — An option that would generate a gain if currently exercised. An option that would not generate a gain is an out of the money option. See intrinsic value …   Big dictionary of business and management

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