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deep-out-of-the-money

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Financial Dictionary

deep-out-of-the-money

  1. Used to describe a call option with a strike price significantly above the market price of the underlying asset. A deep-out-of-the-money call option sells at a low price because in all likelihood it will expire without value.

  2. Used to describe a put option with a strike price significantly below the market price of the underlying asset. A deep-out-of-the-money put option sells at a low price because in all likelihood it will expire without value.


Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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