Options Basics
What is In-the-Money (ITM)?
An option with intrinsic value - the stock has passed the strike price.
📖 Complete Definition
An in-the-money option has intrinsic value. For calls, this means the stock price is above the strike price. For puts, the stock price is below the strike. ITM options are more expensive due to their intrinsic value but have higher delta and higher probability of profit. Deep ITM options behave almost like stock.
💡 Examples
- →A $100 call is ITM when the stock trades at $105 (has $5 intrinsic value)
- →A $100 put is ITM when the stock trades at $95 (has $5 intrinsic value)
❓ Frequently Asked Questions
Should I buy ITM or OTM options?
ITM options cost more but have higher probability of profit. OTM options are cheaper with higher potential returns but lower probability. Choose based on risk tolerance and conviction.
Put Your Knowledge to Practice
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