Moneyness
Also called: in the money, out of the money, at the money, ITM, OTM, ATM
Whether an option is in, at or out of the money, based on the underlying's price compared with the strike.
A call is in the money when the price is above the strike; a put when the price is below it. In-the-money options have intrinsic value, what they would be worth if exercised now. Out-of-the-money options have only time value before expiry and are worthless at expiry.
Learn more in these lessons
- Moneyness, intrinsic value and time valueWhat makes up an option's premium, and why does it shrink as expiry approaches?
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