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🌍 US & Europe · Equity & optionsOut of the money
Also called: OTM
In one line
An option is 'out of the money' when the share value is at or below your strike price, so exercising offers no gain.
In plain English
Out-of-the-money options have no current exercise value — same idea as underwater. They can come back if the company grows, but today there's nothing to gain by exercising.
If you were explaining it to a 5-year-old
Your voucher says 10 coins, but the toy is worth 6. Using it now would lose you money — it's 'out of the money'.
Why it matters when you sell
Out-of-the-money options give you nothing to sell today, so knowing where your strike sits versus value tells you if you have anything to monetise.
Related terms
Put it to use
Are my options worth anything?
When you're ready to go deeper, there's an optional Equity Toolkit and Report.
Sources
A general market-practice term. See how we define and source the glossary in our methodology. General information, not advice.
Educational information only — not financial, tax or legal advice, and not an offer to buy or sell any security. Definitions are general; your own documents and local law govern your situation. PrivateTechShares is independent and not a broker or marketplace.