In-the-money

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In-the-money

A put option that has a strike price higher than the underlying security price, or a call option with a strike price lower than the underlying security price. For example, if the March COMEX silver futures contract is trading at $6 an ounce, a March call with a strike price of $5.50 would be considered in the money by $0.50 an ounce. Related: Put. Antithesis of out-of-the-money.

In-the-Money

1. A call option with a strike price less than the value of the underlying asset.

2. A put option with a strike price more than the value of the underlying asset.

In both these situations, the option contract has intrinsic value. If an option is deep in the money, it is unlikely that the option will be out-of-the money by the time the option is exercised.

in-the-money

Used to describe a call (put) option that has a strike price that is less (more) than the price of the underlying asset. If Convergys common stock is trading at $40 per share, a call option on Convergys with a strike price of $35 is in-the-money.

In-the-money.

An option is in-the-money at any point up to expiration if the exercise price is below the market price of a call option or above the market price of a put option. That means an in-the-money option has value.

For example, if you hold an equity call option with a strike price of 50, and the current market price of the stock is $52, the option is in-the-money.

As the option holder, you could buy the stock at $50 and either sell it at $52 or add it to your portfolio. Or, if you preferred, you could sell the option, potentially at a profit.

In-the-money options are generally among the most actively traded, especially as the expiration date approaches.

References in periodicals archive ?
The price of an ITM option (Rs 150) is higher than the price of an OTM option (Rs 95).
This is because the ITM options are costlier than the OTM options due to intrinsic value along with time value.
The price of an ITM option ( Rs 150) is higher than the price of an OTM option ( Rs 95).
If the ITM option is exercised, it results in a positive cash inflow as a call buyer can purchase the underlying security at less than the market price and a put buyer can sell the underlying at more than the market price.
Generally skewness, kurtosis and the frequency of losses is much higher for short-dated calls than long-dated calls, but these patterns are weak and non-monotonic in ITM options.
Generally skewness, kurtosis and the frequency of losses is much higher for short-dated puts than long-dated puts, but these patterns are weak and non-monotonic in ITM options.
In other words, returns for the OTM options are higher on average than returns for the ITM options.
For ITM options, we found no relation between their implied volatility and future volatility, both in level and in log.
To expand the scope of this work, besides ATM options, we also studied OTM and ITM options.
When the prices of a company's shares decline, its leverage increases as the stock price decreases, and for this reason ITM options tend to have greater implied volatility than ATM and OTM options.
We can see that the average implied volatilities for the OTM and ITM options are indeed higher than those for the ATM options, and they are slightly asymmetric about ATM.
Moving across moneyness at a fixed maturity, it is noted that ITM options are easier to hedge than OTM options in terms of both dollar errors and MADs.