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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.