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trading:options-moneyness

Moneyness

In options trading, moneyness is the relative position of the current market price of an underlying asset with respect to the strike price of the option.

When an option is profitable and makes sense to be exercised we say that it is “in the money” (ITM). Call option is in the money when its strike price is below the current market quotes of the underlying asset. A put option is in the money when its strike price is above the current market quotes of the underlying asset.

If the option position is losing and there is no point to the be exercises we say that it is “out of the money” (OTM). Call option is out of the money when its strike price is above the current market quotes of the underlying asset. A put option is out of the money when its strike price is below the current market quotes of the underlying asset.

When the current market price is equal to the strike of the option we say that it is “at the money” (ATM).