OUT-OF-THE-MONEY (OTM) - An out-of-the-money option is one whose strike price is unfavorable in comparison to the current price of the underlying. This means when the strike price of a call is greater than the price of the underlying, or the strike price of a put is less than the price of the underlying. An out-of-the- money option has no intrinsic value, only time value. PREMIUM- This is the price of an option contract. PUT - This option contract conveys the right to sell a standard quantity of a specified asset at a fixed price per unit (the strike price) fora limited length of time (until expiration). PUT/CALL RATIO - This ratio is used by many as a leading indicator. It is computed by dividing the day average of total put VOLUME by the day average of total call VOLUME.
