What does it mean when a Stock Option is Out of The Money (OTM)?

[What does it mean when a Stock Option is Out of The Money (OTM)?]

Hello and welcome to our latest short [What does it mean when a Stock Option is Out of The Money (OTM)?] video where we will be discussing a common question around the stock market - [What does it mean when a stock option is out of the money?]

Options are a great way to potentially profit from the stock market without actually owning the underlying asset. But when an option is labeled as "out of the money" or OTM, it can be confusing for many investors. But fear not, in this video we will explain this concept in a simple and straightforward way.

First, let's define what an option is. An option is a financial contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price within a certain time frame.

So, what does it mean when an option is out of the money? Essentially, it means that the option's strike price is not favorable to the current market price of the underlying asset. The strike price is the price at which the option can be exercised, and if the market price is not in line with this strike price, the option is considered out of the money.

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