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OTM
OTM (Out-of-the-Money) refers to an option where exercising would be unprofitable. For calls, the underlying is below the strike; for puts, above the strike.
In oil markets, OTM options are used for speculation or hedging extreme scenarios. They often have low premiums but high leverage potential.
Traders must monitor OTM options carefully as market moves can rapidly change their status. Risk management ensures losses remain controlled.
OTM status influences option pricing, volatility measures, and portfolio positioning.