What Is the Relationship between 'Moneyness' and Intrinsic Value? ⎊ Path

What Is the Relationship between ‘Moneyness’ and Intrinsic Value?

Moneyness refers to the relationship between the underlying asset's price and the option's strike price (ITM, OTM, ATM). Only 'in-the-money' (ITM) options have intrinsic value.

'At-the-money' (ATM) and 'out-of-the-money' (OTM) options have zero intrinsic value. The deeper an option is ITM, the higher its intrinsic value.

Can an OTM Option Ever Have a Higher Time Value than an ITM Option?

How Does an Option’s Moneyness Affect Its Premium?

How Does the “Moneyness” of an Option Affect Its Premium Value?

What Are the Practical Implications of Trading ITM, ATM, and OTM Options?

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

How Does the Moneyness of an Option (ITM, ATM, OTM) Relate to the Strike Price?

Define In-The-Money (ITM) for Both a Call and a Put Option

Explain the Concept of “Moneyness” (ITM, ATM, OTM)

Glossar

Intrinsic Value

Valuation ⎊ This represents the in-the-money amount of an option, calculated as the difference between the spot price and the strike price, if positive, otherwise zero.