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Out-of-the-money
       
 
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Out-of-the-money

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Out-of-the-money
Describes an Option for which the Forward market price of the Underlying is below the Strike Price in the case of a call, or above it in the case of a put. The more the Option is out-of-the-money, the cheaper it is (since the chances of it being exercised get slimmer). Its Delta also declines and it becomes less sensitive to movements in the Underlying.

See also At-the-money, In-the-money
Posted by  Privatebanking.com
 
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