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In the money options are options which have positive intrinsic value. This means that at the moment of expiration when no time value is left , the option still represents some value if you exercise it. At the money options are options with strike price equal or very close to the current the word current is very important market price of the underlying asset.
If you only partly know what we are talking about now, the examples that follow will hopefully help clarify it. You may also want to read other articles explaining basic principles of options, which are summarized here: This is the market price of the underlying stock , which is very important for telling whether an option is in the money or at the money.
At the money options are options which have the strike price approximately equal to the current market price of the underlying stock. In our portfolio of 6 options, there are 2 at the money options:. In the money options have positive intrinsic value. When you are buying a stock , lower price is better.
Therefore, call options rights to buy with strike price lower than the current market price of the underlying stock have positive intrinsic value and they are in the money. When you are selling a stock , you prefer higher price. Therefore, put options with strike price higher than the current market price of the underlying are better to own. They have positive intrinsic value and they are in the money. Every option is either in the money, at the money, or out of the money. There is no fourth category.
Here you can read more about the in the money vs. If you don't agree with any part of this Agreement, please leave the website now. All information is for educational purposes only and may be inaccurate, incomplete, outdated or plain wrong. Macroption is not liable for any damages resulting from using the content.
No financial, investment or trading advice is given at any time. Home Calculators Tutorials About Contact. Tutorial 1 Tutorial 2 Tutorial 3 Tutorial 4. In the Money vs. At the Money Options: