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There can be two scenarios:
- When Call Option expires out of the money
- When Put Option expires out of the money
When a Call Option expires out of the money: A call option is said to be Out of The Money (OTM) if the strike price is higher than the current market price of the underlying instrument. In such a case, the buyer loses the premium paid to buy the contract and the seller earns the profit.
When a Put Option expires out of the money: A put option is said to be Out of The Money (OTM) if the strike price is lesser than the current market price of the underlying security. In such a case, the buyer loses the premium paid to buy the contract and the seller earns the profit.
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