OTM

Q: OTM

OTM, or Out of the money, is an expression that refers to an option that only contains extrinsic value. A call option is OTM if the strike price is above the price of the equity in question. Example: With AAPL trading at $182.50 a 190C would be ‘out of the money.’ A put option is OTM if the strike price is below the price of the equity in question. Example: With AAPL trading at $182.50 a 175p would be ‘out of the money.’ An option can also be in the money (ITM) or at the money (ATM).

Question

OTM

Accepted Answer

OTM, or Out of the money, is an expression that refers to an option that only contains extrinsic value.

A call option is OTM if the strike price is above the price of the equity in question.

Example: With AAPL trading at $182.50 a 190C would be ‘out of the money.’

A put option is OTM if the strike price is below the price of the equity in question.

Example: With AAPL trading at $182.50 a 175p would be ‘out of the money.’

An option can also be in the money (ITM) or at the money (ATM).