Business and Personal Finance Dictionary

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• UNDERWATER
  
  Youre underwater when your stock options are out of the money. That means the strike price of a call option is higher than the stocks market price or the strike price of a put option is lower than the market price. Although you can technically be underwater with both call and put options, the term is used primarily to describe a situation that occurs when options youve received as part of an employee compensation package are currently worthless. For example, if you have options on your company stock with a strike price of $50, and the stock is currently trading at $30, youre $20 underwater on each option. You can see how the next step may be drowningfinancially speaking, of course.
  
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