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What does OTM mean in the context of cryptocurrency trading?

avatarCalhoun RyeDec 26, 2021 · 3 years ago3 answers

In cryptocurrency trading, what is the meaning of OTM?

What does OTM mean in the context of cryptocurrency trading?

3 answers

  • avatarDec 26, 2021 · 3 years ago
    OTM stands for 'Out of The Money' in the context of cryptocurrency trading. It refers to an option contract that has no intrinsic value because the current market price of the underlying asset is not favorable for the option holder. When an option is OTM, it means that exercising the option would result in a loss for the holder. Traders often use OTM options for speculative purposes, hoping that the market will move in their favor before the option expires. However, it's important to note that OTM options have a higher risk of expiring worthless compared to options that are in the money or at the money.
  • avatarDec 26, 2021 · 3 years ago
    OTM is short for 'Out of The Money' in cryptocurrency trading. It indicates that the current price of the underlying asset is below the strike price for a call option or above the strike price for a put option. OTM options have no intrinsic value and are considered risky because they are less likely to be profitable if the market doesn't move in the desired direction. Traders often use OTM options for hedging or speculative purposes, but they should be aware of the higher probability of losing the entire investment.
  • avatarDec 26, 2021 · 3 years ago
    In the context of cryptocurrency trading, OTM refers to options that are 'Out of The Money.' This means that the current market price of the underlying asset is not favorable for the option holder. OTM options have no intrinsic value and are considered risky because they are less likely to result in a profit. Traders often use OTM options for speculative purposes, hoping that the market will move in their favor before the option expires. However, it's important to carefully assess the risk-reward ratio before trading OTM options.