How Does the Concept of "In-the-Money" Relate to Cash Settlement for a Call Option? ▴ Learn

How Does the Concept of “In-the-Money” Relate to Cash Settlement for a Call Option?

For a cash-settled call option, being "in-the-money" means the final settlement price of the underlying asset is higher than the option's strike price. The payoff to the option holder is calculated as the difference between the settlement price and the strike price, multiplied by the contract size.

If it's not in-the-money, the payoff is zero.

What Is Meant by an Option Being ‘In-the-Money’ (ITM), ‘At-the-Money’ (ATM), or ‘Out-of-the-Money’ (OTM)?

What Does It Mean for an Option to Be “Out-of-the-Money” (OTM)?

Explain the Difference between a Positive and Negative Delta

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