11.21What is ITM (In the Money)?
1What is it?
An option is in the money if it has intrinsic value: a call with strike below the current price, or a put with strike above it.
2Why does it exist?
ITM options cost more but behave more like the underlying.
3Stock market example
Nifty at 25,000: the 24,800 call is ITM (by 200); the 25,200 put is ITM (by 200).
4Quick revision
- Has intrinsic value.
- Call: strike < spot. Put: strike > spot.
5Knowledge check
Q1. Spot 25,000, 24,500 call: ITM?Show answer
Yes, by 500.
Q2. Spot 25,000, 25,500 put: ITM?Show answer
Yes, by 500.
Q3. Why are ITM options more expensive?Show answer
They contain intrinsic value.