How Does Being ITM Affect the Likelihood of an Option Being Exercised?

An option being in-the-money (ITM) significantly increases the likelihood of it being exercised, especially as the expiration date approaches, because it has a positive intrinsic value and is profitable to exercise. However, American-style options are often not exercised early unless there are special circumstances, as early exercise forfeits the remaining time value.

European options can only be exercised at expiration.