OTM means out of the money. A call is OTM when the underlying price is below its strike; a put is OTM when the underlying price is above its strike.
With a stock at $50, a $55 call and a $45 put are both OTM. Neither has intrinsic value. Before expiration, both can still have a market price reflecting the possibility of a move. If an option remains OTM at expiration, its expiration payoff is zero.
A lower premium alone does not make an OTM option better value. The stock must move far enough to cover the premium for a long option to profit at expiration. Compare ATM and ITM, or read out-of-the-money options and the moneyness guide.
