deep-out-of-the-money

Deep Out of the Money

1. A put option with a strike price less than half the value of the underlying asset.

2. A call option with a strike price more than double the value of the underlying asset.

In both these situations, the option contract has no intrinsic value. It is unlikely that the option will be in the money by the time the option is exercised.

deep-out-of-the-money

1. Used to describe a call option with a strike price significantly above the market price of the underlying asset. A deep-out-of-the-money call option sells at a low price because in all likelihood it will expire without value.
2. Used to describe a put option with a strike price significantly below the market price of the underlying asset. A deep-out-of-the-money put option sells at a low price because in all likelihood it will expire without value.