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.

Investopedia Says:
Basically, an option that would be worthless if it expired today.

Related Links:
An introduction to the world of options, covering everything from primary concepts to how options work and why you might use them. Options Basics Tutorial
Learn why option spreads offer trading opportunities with limited risk and greater versatility. Option Spread Strategies
This options strategy allows your profits to soar in a sideways market. Take Flight With An Iron Condor
When it comes to hedge funds, this measure is not reliable on its own. The Sharpe Ratio Can Oversimplify Risk
Understanding how options work and the markets they trade in will help you get a better price for your option. Alternatives to Closing Below Intrinsic Value
This different approach to the covered call write offers less risk and greater potential profit. An Alternative Covered Call Options Trading Strategy

Term used to describe an Option whose Strike Price for a stock is either higher than the current market value, in the case of a Call, or lower, in the case of a Put. For example, an XYZ December 60 Call option would be out of the money when XYZ stock was selling for $55 a share. Similarly, an XYZ December 60 Put Option would be out of the money when XYZ stock was selling for $65 a share.

Someone buying an out-of-the-money option hopes that the option will move In the Money or at least in that direction. The buyer of the above XYZ call would want the stock to climb above $60 a share, whereas the put buyer would like the stock to drop below $60 a share.

In tournament play, to be one of the players who does not receive a portion of the prize pool.

SoundPoker Says: "If John busts next he's going to be out of the money."

See Also: Bubble, Busted, In The Money, Shootout Tournament