A call option is "out of the money" if the strike price is greater than the market price of the underlying security. That is, you have the right to purchase a security at a price higher than the market price, which is not valuable. A put option is out of the money if the strike price is lower than the market price of the underlying security.
Nearby TermsOutlays Out-of-favor industry or stock Out-of-the-money option Outperform Outright quote
Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University