The 26-year-old, who cost Atletico €75 million when he arrived from Manchester City in 2024, has made no secret of his desire to move on.
Alvarez revealed at the World Cup that he had spoken to the club about a potential transfer to "fulfil my dream", with Barcelona heavily linked in Spanish media reports.
Atletico CEO Miguel Angel Gil Marin, however, said the club would not accept even €200 million for a major asset they wanted to keep.
"Miguel Angel is the club's owner. Nothing is more definitive than the club's owner, it's crystal clear. It's like when a judge hands down a ruling: 'Dismissed,'" Simeone told reporters ahead of Wednesday's game.
"What he said is crystal clear. From a sports perspective, we want to look out for the person, the player, so he can continue to uphold his reputation.
"We don't see him playing in this game. I hope that over the next four days, he'll be closer to where we want him to be."
Alvarez has scored 49 goals in 106 matches for Atletico and Simeone is hoping he may play for their home game against Villarreal on Sunday.
"I still feel the same way I did the other day in Korea (during Atletico's pre-season tour). I handle the sporting side of things," Simeone added.
"We talked as we always do and I understand that, from a sporting standpoint, he still needs to step it up a bit to be in top form for Sunday.
"He needs more practice. He's the best player we have and we're going to try to build a team around him, keeping his level in mind."