DEFINITION of 'Deep Out Of The Money'
An option with a strike price that is significantly above (for a call option) or below (for a put option) the market price of the underlying asset. To be deemed deep out of the money, an option's strike price should be at least one strike price below/above the market price of the underlying asset's option chain.
INVESTOPEDIA EXPLAINS 'Deep Out Of The Money'
For example, if the current price of the underlying stock is $10, a put option with a strike price of $5 would be considered deep out of the money.
While a deep of out the money option seems worthless, the derivative still holds some value. All options, both in and out of the money, contain time value. Time value measures the benefit of having an option with time remaining until maturity. So, while a deep out of the money call or put has no intrinsic value, some investors may be willing to pay a small amount for the remaining time value. However, this time value decreases as the option moves closer to its expiry date.
VIDEO

Near The Money
An options contract where the strike price is close to the current ... 
Moneyness
A description of a derivative relating its strike price to the ... 
Deep In The Money
An option with an exercise price, or strike price, significantly ... 
Derivative
A security whose price is dependent upon or derived from one ... 
Time Value
The portion of an option's premium that is attributable to the ... 
Strike Price
The price at which a specific derivative contract can be exercised. ...

What is the difference between in the money and out of the money?
In options trading, the difference between "in the money" and "out of the money" is a matter of the strike price's position ... Read Full Answer >> 
If a long call is owned on the record date of a stock, is the owner of the option ...
The owner of a long call for a stock is entitled to a dividend only if the option is exercised prior to the exdividend date, ... Read Full Answer >> 
How can an investor profit from the cyclical nature of the electronics sector?
An investor can profit from the cyclical nature of the electronics sector in two ways. He can employ sector rotation, shifting ... Read Full Answer >> 
What does negative vega mean for credit spreads?
Greek vega measures an option's sensitivity with respect to a change in the underlying asset's volatility. The vega of an ... Read Full Answer >> 
What options strategies are best suited for investing in the banking sector?
The covered call option strategy allows investors to profit from the banking sector's stability and its track record for ... Read Full Answer >> 
What options strategies are best suited for investing in the drugs sector?
The covered call and long straddle options strategies enable investors to capitalize on the unique characteristics of the ... Read Full Answer >>

Options & Futures
Naked Call Writing: A Risky Options Strategy
Learn about this aggressive trading strategy to generate income as part of a diversified portfolio. 
Options & Futures
The Importance Of Time Value In Options Trading
Move beyond simply buying calls and puts, and learn how to turn timevalue decay into potential profits. 
Options & Futures
Options Basics Tutorial
Discover the world of options, from primary concepts to how options work and why you might use them. 
Options & Futures
Going Long On Calls
Learn how to buy calls and then sell or exercise them to earn a profit. 
Options & Futures
Prices Plunging? Buy A Put!
You can make money on a falling stock. Find out how going long on a put can lead to profits. 
Options & Futures
SECRegulated Options Brokers
Investopedia provides a List Of SECRegulated Options Brokers 
Options & Futures
How To Trade Orange Juice Options
How do orange juice options work and which factors determine the orange juice valuations? Here's a sneak peak into the world of orange juice options. 
Fundamental Analysis
Explaining the Geometric Mean
The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment or portfolio. 
Options & Futures
Why Is Best Buy Stock So Volatile?
We look at why BBY has been so volatile in the past and whether this trend is likely to continue or abate in the future. 
Investing Basics
What is a Stock Option?
An employee stock option is a right given to an employee to buy a certain number of company stock shares at a certain time and price in the future.