Define the 'Moneyness' of an Option Contract ▴ Learn

Define the ‘Moneyness’ of an Option Contract.

Moneyness describes the relationship between the underlying asset's current market price and the option's strike price. An option can be In-the-Money (ITM), At-the-Money (ATM), or Out-of-the-Money (OTM).

ITM means exercising the option would be profitable, OTM means it would not be profitable, and ATM means the strike price is equal to the current market price.

Define ‘Moneyness’ in the Context of Options Trading and Its Three Classifications

How Does the Moneyness of an Option (ITM, ATM, OTM) Relate to the Strike Price?

How Is Moneyness Different for Call Options versus Put Options?

Define “In-the-Money,” “At-the-Money,” and “Out-of-the-Money” for a Written Call Option