DEFINITION of 'Moneyness'
A description of a derivative relating its strike price to the price of its underlying asset. Moneyness describes the intrinsic value of an option in its current state.
Next Up
BREAKING DOWN 'Moneyness'
Moneyness tells option holders whether exercising will lead to a profit. There are many forms of moneyness, including in,out or at the money. Moneyness looks at the value of an option if you were to exercise it right away. A loss would signify the option is out of the money, while a gain would mean it's in the money. At the money means that you will break even upon exercising the option.
RELATED TERMS

In The Money
1. For a call option, when the option's strike price is below ... 
Exercise Price
The price at which the underlying security can be purchased (call ... 
Out Of The Money  OTM
A call option with a strike price that is higher than the market ... 
Deep Out Of The Money
An option with a strike price that is significantly above (for ... 
Time Value
The portion of an option's premium that is attributable to the ... 
Call Over
When the buyer of a call option exercises the option. In options ...
Related Articles

Options & Futures
What Is Option Moneyness?
Get the basics under your cap before you get into the game. 
Options & Futures
What's the Strike Price?
The strike price is the price at which a derivative can be exercised, and refers to the price of the derivativeâ€™s underlying asset. In a call option, the strike price is the price at which the ... 
Term
What Drives An Option's Price?
The primary drivers of an optionâ€™s price are the underlying stockâ€™s current price, the optionâ€™s intrinsic value, its time to expiration and volatility. 
Options & Futures
Getting A Handle On The Options Premium
The price of an option, otherwise known as the premium, has two basic components: the intrinsic value and the time value. Understanding these factors better can help the trader discern which ... 
Options & Futures
4 Reasons To Hold Onto An Option
There are times when an investor shouldn't exercise an option. Find out when to hold and when to fold. 
Options & Futures
The Basics Of Option Price
Options can be an excellent addition to a portfolio. Find out how to get started. 
Options & Futures
Options Hazards That Can Bruise Your Portfolio
Learn the top three risks and how they can affect you on either side of an options trade. 
Options & Futures
Exploring The World Of Exotic Options
Exotic options provide investors with new alternatives to manage their portfolio risks and speculate on various market opportunities. The pricing for such instruments is considerably complex, ... 
Options & Futures
The Options Premium
An options premium is the amount of money that investors pay for a call or put option. The two components that affect options pricing are the intrinsic value and time value. Matthew is interested ... 
Options & Futures
Getting Acquainted With Options Trading
Learn more about stock options, including some basic terminology and the source of profits.
RELATED FAQS

How do I change my strike price once the trade has been placed already?
Learn how the strike prices for call and put options work, and understand how different types of options can be exercised ... Read Answer >> 
What happens when a security reaches its strike price?
Learn more about the moneyness of stock options and what happens when the underlying security's price reaches the option ... Read Answer >> 
When is a call option considered to be "in the money"?
Learn about call options, their intrinsic values and why a call option is in the money when the underlying stock price is ... Read Answer >> 
When is a put option considered to be "in the money"?
Learn about put options, what they are, how these financial derivatives operate and when put options are considered to be ... Read Answer >> 
Where did the terms inthemoney and outofthemoney come from?
Learn what the terms "in the money" and "out of the money" mean, where the terms come from, and how investors use the terms ... Read Answer >> 
How does the term 'in the money' describe the moneyness of an option?
Find out what in the money means about the moneyness of call or put options and what it indicates about the relationship ... Read Answer >>