7. What does At The Money, Out of The Money and In The Money mean?
At The Money is also known as ATM, meaning an option has no intrinsic value, only time value. A call or put option is ATM if the underlying’s price is the same as the strike price.
Out of The Money is also known as OTM, meaning an option has no intrinsic value, only extrinsic value. A call option is OTM if the underlying’s price is below the strike price. A put option is OTM if the underlying’s price is above the strike price.
In of The Money is also known as ITM, meaning an option has both intrinsic value and extrinsic value. A call option is ITM if the underlying’s price is above the strike price. A put option is ITM if the underlying’s price is below the strike price.
ATM
OTM
ITM
Call Option
Current_Price
=
Strike_Price
Current_Price
<
Strike_Price
Current_Price
>
Strike_Price
Put Option
Current_Price
=
Strike_Price
Current_Price
>
Strike_Price
Current_Price
<
Strike_Price
For protection of option buyers, at this moment, Option Panda only issues ATM options.
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