What are In-The-Money (ITM), At-The-Money (ATM), and Out-Of-The-Money (OTM) in Options?

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HomeFrequently Asked Questions (FAQs)Trading GuideFutures & Options TradingWhat are In-The-Money (ITM), At-The-Money (ATM), and Out-Of-The-Money (OTM) in Options?

These are terms that signify the position of the strike price of the Option compared to the current price.

In The Money: This term used in options trading to describe a situation where exercising the option would lead to a profit, based on the current market price of the underlying asset.

  • Call Option – If the current price of a Call Option is higher than the strike price, then it is said to be “In The Money or ITM”.
  • Put Option – If the current price of a Put Option is lower than the strike price, then it is said to be “In The Money or ITM”.

At The Money

An option is said to be At The Money (ATM) when the current price of the underlying asset is equal (or very close) to the strike price of the option.

  • For both call and put options, if the market price and strike price are the same, the option is ATM.

Out of The Money

An option is Out of the Money (OTM) when exercising it would not be profitable because the strike price is unfavourable compared to the current market price of the underlying asset.

  • Call Option – If the current price of a Call Option is lower than the strike price, then it is said to be “Out Of The Money or OTM”.
  • Put Option – If the current price of a Put Option is higher than the strike price, then it is said to be “Out Of The Money or OTM”.