Definition of "Deep Out Of The Money"

A call option whose exercise (strike) price is considerably above the underlying security's current market price--that is, the strike price is 5 or more points above the underlying security's current market price. In regard to a put option, the exercise price is well below the underlying security's current market price--that is, the strike price is 5 or more points below the underlying security's current market price. When buying a deep-out-of-the-money option, the premium is small because the option may never be profitable.