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What is at-the-money options ?


Out of the money(OTM) is an expression used to describe an option contract that only contains extrinsic value.  An out-of- the-money Option is an option that would lead to negative cash fl ow if it were exercised immediately. A Call option is out-of-the-money when the current price stands at a level which is less than the strike price. If the current price is much lower than the strike price the call is said to be deep out-of-the money.


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