Why do out of the money have any value ?
Every option has two sources of value for it:
1. Intrinsic Value: The value inherent at time of purchase which is the money you make on immediate exercise. Thus this is also the current value of option.
2. Time value of money: This value comes in picture because the option still has some time to maturity. And during this period, the value of the option can increase or decrease. This in a way is a value to the uncertainty associated with the option. This is thus a future value of the option.
An out of money option has:
Hence, out of money options also have value and it's due to their time value.
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