When is a call option out of the money?

A call option is out of the money when the strike price is higher than that of the underlying asset while a put option is out of the money when the strike price is lower than the price of the underlying asset. Traders must decide whether to sell, exercise, or let their options expire as they get closer to the expiration date.

What happens if a call option expires?

When the option is in the money and approaches expiration, the holder can either sell the option to lock in the value or exercise the option to buy the shares. If the underlying security trades below the strike price at expiry means the call option is considered out of the money. The maximum amount of money the contract holder loses is the premium.

What is an option expiration date?

It is part of the creation and listing of all new series of calls and puts on the various underlying stocks, ETFs, indexes and futures on which options are made available to buy and sell. The expiration date is the end of the contract – the last day the owner of the option has the right to buy or sell the underlying asset at the strike price.