What Is the Role of Intrinsic Value in Determining Moneyness?

Intrinsic value is the fundamental component of moneyness. Moneyness is the classification (ITM, ATM, OTM) that describes whether an option has intrinsic value.

An option has intrinsic value if it can be exercised for an immediate profit. If the intrinsic value is positive, the option is in-the-money (ITM).

If the intrinsic value is zero, the option is at-the-money (ATM) or out-of-the-money (OTM).