In-the-Money (redirected from ITM Options)

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.

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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.

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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.

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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.