It stands for out-of-the-money option; always from buyer’s perspective, it is an option whose underlying’s market price at a given point within its time to maturity (for American options) or at expiration date (for European options) falls short of the combined value of its strike price and the premium (if a call) or whose underlying’s price exceeds the net value of its strike price minus premium (if a put).
January 16, 2024