Out-of-the-money option
Out-of-the-money option
Out-of-the-Money Option
2. A put option with a strike price less than the value of the underlying asset.
In both these situations, the option contract has no intrinsic value. If an option is deep out of the money, it is unlikely that the option will be in-the money by the expiration date. If possible, out-of-the-money options are sold; if not, they expire worthless and the option holder loses the premium.