Options & derivatives
Out of the money
An option is "out of the money" when exercising it would not be profitable at the current price: it only has time value.
An option is "out of the money" when exercising it would not be profitable at the current price: it only has time value.
A call is out of the money if the price is below the strike; a put, if the price is above. These options are cheap but risky: if the price does not move enough by expiry, they end worthless.
A $50-strike call on a $46 stock is out of the money: it needs a rise to pay off.
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