Business and Personal Finance Dictionary

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z 

• OUT OF THE MONEY
  
  In the options market, you are out of the money when the market price of a stock is not close to the strike price. In the case of call options-which you buy when you think the price is going up-you're out of the money when the stock price is below the strike price. And in the case of put options-which you buy when you think the price of the underlying investment is going down-you're out of the money when the stock price is higher than the strike price. For example, a call option on a stock with a strike price of $50 would be out of the money if the current market price were $45. And a put option on the same stock would be out of the money if its market price were $55. When an option is out of the money, you don't exercise it but let it expire.
  
  Back