Moneyness
The relationship between an option's strike price and the current price of the underlying — ITM, ATM, or OTM. Directly drives intrinsic value and delta.
Moneyness describes where an option's strike price sits relative to the current spot price of the underlying. It is the most fundamental descriptor of an option's current state.
The three states: in the money (ITM) — the option has positive intrinsic value; at the money (ATM) — the strike equals (or is very close to) spot; out of the money (OTM) — the option has no intrinsic value, only time value.
Moneyness determines delta, premium composition, and exercise likelihood. Deep ITM options behave like the underlying; far OTM options are cheap lottery tickets with near-zero delta.
Related Terms
At the Money (ATM)
An option whose strike price equals (or is very close to) the current spot price of the underlying.
IntermediateDelta
The rate of change in an option's price for a $1 move in the underlying. Ranges from 0 to 1 for calls and −1 to 0 for puts.
IntermediateIntrinsic Value
The immediate exercise value of an option — how much in the money it is right now, ignoring time and volatility.
Intermediate