What Is ITM.OTM ATM????(ITM이란 무엇인가.OTM ATM?? )

What Is In The Money (ITM)?(ITM이란 무엇인가.OTM ATM?? )

 

 

 

In the money (ITM) is a term that refers to an option that possesses intrinsic value.(내재가치) ITM thus indicates that an option has value in a strike price that is favorable in comparison to the prevailing market price of the underlying asset:

 

• An in the money call option means the option holder has the opportunity to buy the security below its current market price.
• An in the money put option means the option holder can sell the security above its current market price.

 

An option that is ITM does not necessarily mean the trader is making a profit on the trade. The expense of buying the option and any commission fees must also be considered. In the money options may be contrasted with out of the money (OTM) options.

What Is Out Of the Money (OTM)?

 

Out of the money (OTM) is a term used to describe an option contract that only contains intrinsic value. These options will have a delta less than 50.0.

 

An OTM call option will have a strike price that is higher than the market price of the underlying asset. Alternatively an OTM put option has a strike price that is lower than the market price of the underlying asset.

 

OTM options may be contrasted with in the money (ITM) options.

 

Key Takeaways

• Out of the money means an option has no intrinsic value, only extrinsic value.
• A call option is OTM if the underlying's price is below the strike price. A put option is OTM if the underlying's price is above the strike price.
• An option can also be in the money or at the money.
• OTM options are less expensive than ITM or ATM options. This is because ITM options have intrinsic value, and ATM options are very close to having intrinsic value.
  

What is At The Money (ATM)?

 

At the money (ATM) is a situation where an option's strike price is identical to the price of the underlying security. Both call and put options can be simultaneously ATM. For example, if XYZ stock is trading at $75, then the XYZ 75 call option is at the money and so is the XYZ 75 put option. An ATM option has no intrinsic value, but it may still have time value prior to expiration. Options trading activity tends to be high when options are ATM. 

Understanding At The Money

 

 

At the money is one of three terms used to describe the relationship between an option's strike price and the underlying security's price, also called the option's moneyness. Options can be in the money (ITM), out of the money (OTM), or at the money. ITM means the option has intrinsic value. OTM means the option has no intrinsic value. Simply put, at the money options are not in a position to profit if exercised, but they still have value in that there is still time before they expire so they may yet end up in the money.

 

 

The intrinsic value for a call option is calculated by subtracting the strike price from the underlying security's current price. The intrinsic value for a put option is calculated by subtracting the underlying asset's current price from its strike price. A call option is in the money when the option's strike price is less than the underlying security's current price. Conversely, a put option is in the money when the option's strike price is greater than the underlying security's stock price. A call option is out of the money when its strike price is greater than the current underlying security's price. A put option is out of the money when its str

KEY TAKEAWAYS

• At the money options have no intrinsic value, but they still have time value.
• At the money options usually cost more than out of the money options because they are closer to profiting in the time remaining until expiry.
• At the money options are most attractive when a trader expects a large movement in a stock.ike price is less than the underlying asset's current price

 

• What is Moneyness? 

Moneyness is 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. The term moneyness is most commonly used with put and call options and is an indicator as to whether the option would make money if it were exercised immediately. Moneyness can be measured with respect to the underlying stock or other asset's current/spot price or its future price.

 

 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.

 

Example of Moneyness

If the current price of XYZ stock is $50, a call or put option with a strike price of $50 would be at the money. Exercising the option would result in a breakeven for the investor. A put with a strike price of $75 would be in the money because it would allow the holder of the put to sell the stock for a higher price than it is currently trading. on the other hand, a call with a strike price of $75 would be out of the money because there is no reason the holder of a call would want the opportunity to purchase XYZ stock for $75 when they could get it on the open market for $50.