Options

Out-of-the-Money (OTM)

An Option strike where exercising it right now would not be favorable — still retains time value until expiry.

An option is out-of-the-money (OTM) when exercising it right now would not be favorable. For a Call option, this means the strike price is above the current market price. For a Put option, the direction flips — the strike price is below the current market price. OTM options aren’t worthless while time remains before expiry — they retain time value.

See the full ITM/ATM/OTM breakdown for both Calls and Puts in ITM, ATM, OTM Explained: Understanding Option Moneyness.