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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).