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out of the money

the situation in which the fixed price of an option turns out to be a less favorable price than that currently available in the market, resulting in a loss for the investor. The holder of an option to sell a security is out of the money when the option price is lower than the market price. Conversely, the holder of an option to buy is out of the money when the option price is higher than the market price.

Source : U.S. Department of the Treasury

Language : English

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