Out of the money

Out of the money (OTM) is a financial term that applies to both call options and put options. When an option is out of the money, this means it does not have intrinsic value, only extrinsic value (time value and the volatility of the underlying asset). If a contract is out of the money when it expires, it is worthless and the buyer loses any premium they paid.

Call options are out of the money when the strike price (amount you agreed to pay) is higher than the market price (the current value). Put options are out of the money when the strike price (agreed sale price) is lower than the market price.