What is Binary Options Out of the Money? – Definition

Binary options out of the money contract are defined as an asset when the market price is below the strike price. It applies to the top four strikes as present in that of the image. The contracts far below the strike price are less likely to reach ITM or get profitable for buyers. Hence, you can also conclude that the price of these assets will be low for the buyers. 

The traders who will possess statistical advantage will pay more than these contracts to attain maximum profits. The OTM buy binary options will have a strike that is higher than that of the underlying market price. Therefore, you can conclude that this is the probable reason for the asset to have a low price. 

As there is no intrinsic value to the asset, the expectation for it to end in the money is rare. Hence, it will be out-of-the-money. Suppose if the strike price is $50, and the market price is somewhere around $10 or low. Hence, you can call it an OTM situation for an asset. From this position, it becomes difficult for the asset to reach the strike price or go beyond it. 

In addition to that, consider having a strategic analysis of the asset’s price fluctuation and market signals. If you have it, then you can go ahead with buying an OTM asset. But if you are not well aware of it, then you must always go with ITM assets only. 

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