Define the Three States of “Moneyness” for a Call Option

The three states of moneyness for a call option are: 1. In-the-Money (ITM): Underlying price is above the strike price.

The option has intrinsic value. 2.

At-the-Money (ATM): Underlying price is equal or very close to the strike price. Maximum extrinsic value/uncertainty.

3. Out-of-the-Money (OTM): Underlying price is below the strike price.

The option has no intrinsic value.