Definition
An option with no intrinsic value - calls when price < strike, puts when price > strike.
Understanding Out of The Money (OTM)
Out of The Money (OTM) is an important concept in stock market trading. Understanding this term will help you make better trading decisions and communicate effectively with other traders and financial professionals.
Key Points
- Basic Definition: An option with no intrinsic value - calls when price < strike, puts when price > strike.
- Category: This term is commonly used in Derivatives
- Relevance: Essential knowledge for traders operating in Indian stock markets
Practical Example
When trading on NSE or BSE, you'll encounter out of the money (otm) regularly. For example, understanding this concept helps you analyze market conditions, make informed decisions, and manage your trading positions effectively.
Related Concepts
To fully understand out of the money (otm), you should also be familiar with related trading concepts. Check out the related terms in the sidebar for a comprehensive understanding of this topic.