Define: Out Of The Money

UK Accounting Glossary

Definition: Out Of The Money



Advertisement



Full Definition of Out Of The Money


An option is out of the money if it cannot be exercised at a profit given the current price of the underlying asset. If the option is close to expiration and significantly out of the money, it is said to be deep out of the money. An out of the money option can become not only deep out of the money, but also at the money or in the money if the price of the asset moves favourably relative to the strike price of the option. A call option is out of the money if the strike price is above the market price of the underlying asset. A put option is out of the money if the strike price is below the market price of the underlying asset.


Advertisement




Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/out-of-the-money/
Modern Language Association (MLA):
Out Of The Money. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. March 31, 2020 https://payrollheaven.com/define/out-of-the-money/.
Chicago Manual of Style (CMS):
Out Of The Money. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/out-of-the-money/ (accessed: March 31, 2020).
American Psychological Association (APA):
Out Of The Money. PayrollHeaven.com. Retrieved March 31, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/out-of-the-money/

Definition Sources


Definitions for Out Of The Money are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 6th February 2020.