Out of the money (OTM)
An option with no intrinsic value: a call whose strike is above the current stock price, or a put whose strike is below it. Its entire premium is extrinsic value that will vanish at expiration unless the stock crosses the strike.
OTM options are cheap for a reason: most of them expire worthless. Buying them is buying a low-probability, high-multiple payoff; selling them is collecting small premiums against occasional large moves.
Neither side is inherently smarter. What matters is whether the premium fairly compensates the probability — which is exactly the question the volatility risk premium literature studies.
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