Types of Moneyness (In-the-money, At-the-money, Out-of-the-money)

Moneyness refers to the relationship between the current market price of the underlying asset and the strike price of an option. It plays a key role in determining an option's profitability. For example, if

is trading at ₹1226.90: • In-the-money (ITM): A 1200 call option would be ITM because the strike price (₹1200) is lower than the current price (₹1226.90). The call option holder can exercise it profitably. • At-the-money (ATM): A strike price of ₹1226.90 would be ATM since it is almost equal to the current market price. • Out-of-the-money (OTM): A 1250 put option is OTM, as the market price is higher than the strike price, meaning it would not be profitable to exercise it. The value of an option depends heavily on moneyness, influencing how much time value and intrinsic value the option holds. Disclaimer: This post is for educational purposes only and does not constitute investment advice. Please conduct your own research or consult a financial advisor before making any investment decisions.