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Underwater

Underwater Definition

Also known as “out of the money,” this term refers to a call option whose strike price is greater than the market price of the underlying stock.  

Underwater can also describe a loan where the amount owed is greater than the value of the asset being used for collateral for the loan.  Such is the case when the market value of a home is less than the current balance on the loan that financed its purchase.  This results in bank foreclosures.

RELATED TERMS
Call option
Strike price
RELATED CATEGORIES
Options & Futures
Real Estate







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