What is out of the money (OTM)?OTM
An option with no intrinsic value, such as a call whose strike is above the stock price.
Learn “out of the money (OTM)” in an animated lesson
- Options BasicsIntrinsic Value and Time Value
An option's price splits into two parts: what it's worth right now, and what it's worth because there's still time left.
- Options BasicsOption Leverage and the Risk of Going to Zero
One call costs a fraction of the stock price yet shares in the gains on 100 shares. But if the stock doesn't rise enough, it goes to zero. Compare the returns of buying stock vs. buying a call.
- Options BasicsIn, At and Out of the Money
Drag the stock price and watch a call and a put with the same strike flip between in the money and out of the money.
- Options BasicsReading an Option Chain
That big T-shaped table in your trading app: strikes in the middle, calls on the left, puts on the right, each cell with a bid and an ask. Learn to pick out the contract you want.
- Options: Next StepsExercise, Assignment and Expiration Day
What actually happens on expiration day? In-the-money options are auto-exercised, sellers get randomly assigned, and your shares and cash change hands. Plus, why exercising early usually doesn't pay.
Related terms
See how “out of the money (OTM)” works for yourself with an animation you can drag and play.
Go to “Intrinsic Value and Time Value”