What is the definition of OTM in the context of cryptocurrency trading?
MesutDec 26, 2021 · 3 years ago3 answers
In the world of cryptocurrency trading, what does OTM mean?
3 answers
- Dec 26, 2021 · 3 years agoOTM 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 price of the underlying asset is below the strike price for a call option or above the strike price for a put option. In other words, if you hold an OTM option, exercising it would result in a loss. It is important to understand the concept of OTM when trading cryptocurrency options to make informed decisions.
- Dec 26, 2021 · 3 years agoOTM is short for Out of The Money in cryptocurrency trading. It means that the current price of the underlying asset is not favorable for the option holder. For example, if you have a call option and the strike price is $100, but the current price of the asset is only $90, the option is considered OTM. OTM options are less valuable and carry higher risk compared to options that are in the money (ITM) or at the money (ATM). Traders need to carefully analyze the market conditions and the likelihood of the option becoming profitable before investing in OTM options.
- Dec 26, 2021 · 3 years agoIn cryptocurrency trading, OTM refers to Out of The Money. It is a term used to describe an option contract that would result in a loss if exercised at the current market price. For example, if you have a put option with a strike price of $100, but the current market price of the underlying asset is $110, the option is considered OTM. OTM options are generally cheaper to purchase compared to in the money (ITM) or at the money (ATM) options, but they also carry higher risk. Traders need to carefully assess the market conditions and the potential for the option to move in their favor before investing in OTM options.
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