Sun. Aug 1st, 2021

Options Funda

All about options and its strategies

In- The- Money Option (ITM)

1 min read

An in-the-money (ITM) option is an option that would lead to a positive cashflow to the holder if it were exercised immediately. A call option on the index is said to be in-the-money when the current index stands at a level higher than the strike price (i.e. spot price> strike price). If the index is much higher than the strike price, the call is said to be in deep ITM.

In the case of a put, the put is ITM if the index is below the strike price.

ITM strikes’ prices have two attributes which decide the value of the option i.e. time value and intrinsic value. Generally deep ITMs have low volumes thus more bid-ask spread. 

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