Out Of The Money
An option with no intrinsic value yet — cheap, all time value, and dependent on the underlying moving in your favour.
Definition
An option is out of the money (OTM) when it has no intrinsic value — exercising it now would yield nothing. A call is OTM when spot is below its strike; a put is OTM when spot is above its strike. Its entire premium is time value.
Why it matters
OTM options are cheap and offer high leverage, which is why they attract directional buyers and short-term traders. The trade-off is that they lose value fast from theta decay and expire worthless unless the underlying moves past the strike. Heavy OTM call or put open interest on the chain often marks where the crowd is positioned.
Example
NIFTY spot is 22,500. A 22,800 call is OTM — the index must climb above 22,800 for it to gain intrinsic value. A 22,200 put is also OTM — the index must fall below 22,200 first. Until then both are pure time value.
Spot OTM strikes live
TradePulse's option chain shows premium, OI and IV at every OTM strike so you can judge cheap directional bets.