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.
BREAKING DOWN '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.

Deep In The Money
An option with an exercise price, or strike price, significantly ... 
Out Of The Money  OTM
A call option with a strike price that is higher than the market ... 
In The Money
1. For a call option, when the option's strike price is below ... 
Near The Money
An options contract where the strike price is close to the current ... 
Bear Call Spread
A type of options strategy used when a decline in the price of ... 
Strike Price
The price at which a specific derivative contract can be exercised. ...

Options & Futures
What's the Strike Price?
The strike price is the price at which a derivative can be exercised, and refers to the price of the derivativeâ€™s underlying asset. In a call option, the strike price is the price at which the ... 
Options & Futures
What Is Option Moneyness?
Get the basics under your cap before you get into the game. 
Options & Futures
Getting Acquainted With Options Trading
Learn more about stock options, including some basic terminology and the source of profits. 
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. 
Active Trading
How To Manage A Bull Call Spread
A bull call spread, also called a vertical spread, involves buying a call option at a specific strike price and simultaneously selling another call option at a higher strike price. 
Options & Futures
Three Ways to Profit Using Put Options
A brief overview of how to profit from using put options in your portfolio. 
Options & Futures
Exploring The World Of Exotic Options
Exotic options provide investors with new alternatives to manage their portfolio risks and speculate on various market opportunities. The pricing for such instruments is considerably complex, ... 
Trading Strategies
A Guide Of Option Trading Strategies For Beginners
Options offer alternative strategies for investors to profit from trading underlying securities, provided the beginner understands the pros and cons. 
Options & Futures
Types of Options
There are many different types of options. In addition to general put options and call option, we will discuss 13 different types of options. Some of these option types are better suited to day ... 
Options & Futures
Options Hazards That Can Bruise Your Portfolio
Learn the top three risks and how they can affect you on either side of an options trade.

What is the difference between in the money and out of the money?
Learn about how the difference between in the money and out of the money options is determined by the relationship between ... Read Answer >> 
How does the term 'in the money' describe the moneyness of an option?
Find out what in the money means about the moneyness of call or put options and what it indicates about the relationship ... Read Answer >> 
How do I change my strike price once the trade has been placed already?
Learn how the strike prices for call and put options work, and understand how different types of options can be exercised ... Read Answer >> 
What happens when a security reaches its strike price?
Learn more about the moneyness of stock options and what happens when the underlying security's price reaches the option ... Read Answer >> 
Where did the terms inthemoney and outofthemoney come from?
Learn what the terms "in the money" and "out of the money" mean, where the terms come from, and how investors use the terms ... Read Answer >> 
When is a put option considered to be "in the money"?
Learn about put options, what they are, how these financial derivatives operate and when put options are considered to be ... Read Answer >>