What is the concept of in-the-money, at-the-money and out-of-the-money with regard to Options?
  • In-the-Money (ITM): A Call option is said to be in-the-money when the current price stands at a level higher than the strike price. If the spot price is much higher than the strike price, a Call is said to be a deep in-the-money option. The Put option contract is in-the-money if the spot price is below the strike price.
  • Out-of-the-Money (OTM): A Call option is out-of-the-money when the current price stands at a level that is less than the strike price. If the current price is much lower than the strike price, the call is said to be deep out-of-the money. The Put option contract is said to be out-of-the-money if the current price is above the strike price.
  • At-the-Money (ATM): An option on the index is said to be at-the-money when the current price equals the strike price.
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