New bie question. What is an out of the money call?

U

uasish

Guest
#2
#2
The calls whose strike price is way above the underlying's prevalent mkt price.
 
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sudoku1

sudoku1

Well-Known Member
#3
#3
luxgupta said:
What is an out of the money call?

Thanks,
luxgupta
Click to expand...

Out Of The Money (OTM) ............

1. For a call, when an option's strike price is higher than the market price of the underlying asset.

2. For a put, when the strike price is below the market price of the underlying asset.

Basically, an option that would be worthless if it expired today ......:)
 
M

marcus

Active Member
#4
#4
just a quick note to luxgupta, the term is misleading, in the money, at the money and out of the money does not take into consideration the premium paid so an in the money option would not mean you'd make a profit you have to consider the premium as well to find your net value.
 
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