In The Money


DEFINITION of 'In The Money'

1. For a call option, when the option's strike price is below the market price of the underlying asset.

2. For a put option, when the strike price is above the market price of the underlying asset.

Being in the money does not mean you will profit, it just means the option is worth exercising. This is because the option costs money to buy.


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In the money means that your stock option is worth money and you can turn around and sell or exercise it. For example, if John buys a call option on ABC stock with a strike price of $12, and the price of the stock is sitting at $15, the option is considered to be in the money. This is because the option gives John the right to buy the stock for $12 but he could immediately sell the stock for $15, a gain of $3. If John paid $3.50 for the call, then he wouldn't actually profit from the total trade, but it is still considered in the money.

  1. Far Option

    The option with the longer time to expiration in a calendar option ...
  2. Out Of The Money - OTM

    A call option with a strike price that is higher than the market ...
  3. At The Money

    A situation where an option's strike price is identical to the ...
  4. Exercise

    To put into effect the right specified in a contract. In options ...
  5. Call Option

    An agreement that gives an investor the right (but not the obligation) ...
  6. Underwater

    An option that would be worthless if it expired today. An underwater ...
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  1. What is the difference between in the money and out of the money?

    In options trading, the difference between "in the money" and "out of the money" is a matter of the strike price's position ... Read Full Answer >>
  2. When is a call option considered to be "in the money"?

    A call option gives the buyer or holder the right, but not the obligation, to buy the underlying security at a predetermined ... Read Full Answer >>
  3. When is a put option considered to be "in the money"?

    An option contract is a financial derivative that represents a holder who buys a contract sold by a writer. The moneyness ... Read Full Answer >>
  4. Where did the terms in-the-money and out-of-the-money come from?

    "In the money" and "out of the money" are used in the options market to describe whether an option's strike price is above ... Read Full Answer >>
  5. Why does delta only range from 1 to -1?

    Delta measures the sensitivity of an option relative to the underlying asset. It measures the rate of change in the price ... Read Full Answer >>
  6. Why are options very active when they are at the money?

    Stock options, whether they are put or call options, can become very active when they are at the money. In the money options ... Read Full Answer >>

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