What Is In the Money (ITM)? Meaning & Example
Definition
An option is in the money when it has intrinsic value: a call with a strike below the market price or a put with a strike above it. ITM options cost more because of that built-in value.
Related terms
An option is out of the money when it has no intrinsic value: a call with a strike above the market price or a put with a strike below it. Its premium consists entirely of time value.
Strike PriceThe strike price is the set price at which an option holder can buy (call) or sell (put) the underlying asset. It determines whether an option has intrinsic value.
DeltaDelta estimates how much an option's price changes for a $1 move in the underlying asset. It also gives a rough sense of the probability of finishing in the money.
What is In the Money (ITM)?
An option is in the money when it has intrinsic value: a call with a strike below the market price or a put with a strike above it. ITM options cost more because of that built-in value.
Can you give an example of In the Money (ITM)?
A $45 call on a stock trading at $50 is $5 in the money.