General Investing
  -General information about
  getting started.
Stocks
  -How investing in the stock
  market works
Bonds
  -How bond investing works
Mutual Funds
  -How mutual funds work
Economics
  -A basic intro to the economy
Advanced Investing Topics
  -This section covers topics
   like futures and options

Out of the Money
Term category: Derivatives, Advanced
In 10 words or less: A situation in which a stock's price hasn't passed the strike price.

Definition: Options are said to be out of the money when they can't be exercised. For call options, this occurs when the stock price is below the strike price.  For put options, this occurs when the stock price is above the strike price.

Advice: Even though an option is out of the money, it doesn't necessarily mean the option is worthless.  Because there's a potential the option may eventually be in the money, there's some value in the option.

Out of the money options are also commonly referred to as "under water."

 

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