underwater > define

adjective

• Beneath the surface of the water.
  • usage: "submerged rocks"
  • synonyms: submerged, submersed
• Growing or remaining under water.
  • usage: "viewing subaqueous fauna from a glass-bottomed boat"; "submerged leaves"
  • synonyms: subaqueous, subaquatic, submerged, submersed

Youre' Underwater' when your stock options are out of the money. That means the strike price of a call option is higher than the stocks market price or the strike price of a put option is lower than the market price. Although you can technically be underwater with both call and put options, the term is used primarily to describe a situation that occurs when options youve received as part of an employee compensation package are currently worthless. For example, if you have options on your company stock with a strike price of $50, and the stock is currently trading at $30, youre $20 underwater on each option. You can see how the next step may be drowningfinancially speaking, of course.