Moneyness

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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.

INVESTOPEDIA EXPLAINS '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
  1. At The Money

    A situation where an option's strike price is identical to the ...
  2. Deep In The Money

    An option with an exercise price, or strike price, significantly ...
  3. Exercise

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

    An agreement that gives an investor the right (but not the obligation) ...
  5. Strike Price

    The price at which a specific derivative contract can be exercised. ...
  6. Deep Out Of The Money

    An option with a strike price that is significantly above (for ...
RELATED FAQS
  1. Should I buy options that are in the money or out of the money?

    Choosing which specific option to buy can often be a complicated process, and there are literally hundreds of optionable ... Read Full Answer >>
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