An option (www.practicallaw.com/A36577) with no value. A call option (www.practicallaw.com/A34596) is out of the money when the strike or exercise price (www.practicallaw.com/A36056) is above the price of the underlying security. Similarly a put option (www.practicallaw.com/A36746) is out of the money when the exercise price is below the price of the underlying security.