What Is the Concept of ‘Moneyness’ in Options Trading?
Moneyness describes the relationship between an option's strike price and the current market price of the underlying asset. It classifies options into three states: In-The-Money (ITM), At-The-Money (ATM), or Out-of-The-Money (OTM).
Moneyness is crucial because it indicates whether an option has intrinsic value and how likely it is to be exercised.
