These are options contract with no intrinsic value. A Call option is OTM when the strike price is above the current market price. A Put option is out-of-the-money when their strike price is below the current market price of the current market price.
You should also check out In The Money Options & At the Money Options
101 Arch Street, Suite 601 Boston, Massachusetts 02110 BOX Exchange LLC (BOX) is a national securities exchange registered with the Securities and Exchange Commission (SEC) under Section 6 of the Securities Exchange Act of 1934. It is a fully electronic options exchange that offers trading in U.S. equity options. BOX Exchange is operated by BZX…
The time Value of Options refers to the value of the options contract beyond its intrinsic value. Time value is equal to the extrinsic value of the options contract. Out-of-the-money options consist only of time value. The value of in-the-money options can include both intrinsic value and time value. See also In The Money Options,…
This is when you buy a Put and sell another Put with a lower strike price. You would only use this spread if you are expecting the underlying stock to move up moderately because it will help you to benefit from the time decay. For example, let’s say you are anticipating a moderate rise in…
A range option is a European-style, cash-settled option that has a payout if the value of the underlying interest falls within a specific range of values (the range length) at expiration. As the underlying interest value increases throughout the range length, the amount of the payout (i.e., the cash settlement amount) of the range option…
This is the process of satisfying put exercise or call assignment. In either case, stock is delivered. In the case of indexes, delivery involves the transfer of cash equal to the settlement value of the index minus the strike price of the options contract. See also: Options Assignment, Automatic Exercise, American Style Option
A closing purchase is an order that you place to offset an existing short position. For example, If you sell a call option to open a new position, you would then need to offset or close that position with a closing order to buy. In other words, you would buy-to-close.
