Out-of-the-money option

What is an out-of-the-money option?

An out-of-the-money option (Swedish: minusoption) is an option with no intrinsic value. For a call option, this means that the strike price (lösenpris) is higher than the current value of the underlying share. Exercising it then would not be worthwhile.

Out-of-the-money options in incentive programs

An option can be out of the money at one point and gain intrinsic value later if the share value rises. This is common in a stock option program and for employee stock options, where terms and vesting govern when the holder can receive shares. Options and exercises must be documented so the ownership picture is accurate.