Define “Moneyness” in the Context of Options Trading

Moneyness is a term used to describe the relationship between an option's strike price and the current price of the underlying asset. It is a classification system that determines whether an option is In-the-Money (ITM), At-the-Money (ATM), or Out-of-the-Money (OTM).

An option's moneyness dictates its intrinsic value and heavily influences its Delta and other Greeks. For example, a call option is ITM if the underlying price is above the strike price, and OTM if it is below.