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.