Out-of-the-money is a term from options trading.
A call option (the right to buy a stock at a set price) is out-of-the-money when the stock price is lower than the option strike price.
A put option (the right to sell a stock at a set price) is out-of-the-money when the stock price is higher than the option strike price.
An out-of-the-money option has no intrinsic value, only time value. The option has time value until it reaches its expiry date.
Jim Leitner uses an option-based strategy whenever possible to manage his fund and is not afraid to sit on long-dated out-of-the-money options and just wait until they eventually pay off.
“When I started trading currencies, options didn’t even exist. Today you can get options on anything and the bid/offer spreads are peanuts.”
Jim Leitner speaking to Steven Drobny, Inside the House of Money
Options can also be at-the-money or in-the-money.