How Does the Relationship between Strike Price and Underlying Price Define the “Moneyness” of an Option?
The "moneyness" of an option is determined by comparing the option's strike price to the underlying asset's current market price. For a call option, if the underlying price is above the strike, it is In-the-Money (ITM).
If the prices are equal, it is At-the-Money (ATM). If the underlying price is below the strike, it is Out-of-the-Money (OTM).
The inverse applies to put options.
