The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be answering the question, “What does out of the money mean?” When we’re talking about stock options and in particular, the strike price of an option contract relative to where the underlying stock price is, you will often hear the terms “out of the money” or “in the money” be talked about. And so, what out of the money means is that there’s no intrinsic value in that contract. It means that if the stock was to move, it would have to move dramatically in the direction of that strike price in order for the option contract to go in the money. And in the money means that basically, there’s value in that contract when it reaches expiration, there’s intrinsic value that if you were to exercise that contract, you could generate a profit or a differential between the stock price and the strike price of your option contract. Typically with call options, any call option that has a strike price that is high