Moneyness

Where the strike sits relative to the stock price — in, at or out of the money.

Moneyness describes where an option's strike sits relative to the current price of the underlying. A call is in the money when the stock trades above the strike, at the money when they roughly line up, and out of the money when the stock is below. For puts the logic flips. It sounds like a small detail, but it drives how much of the premium is real intrinsic value and how much is just time value that decays.

In practice traders use moneyness as shorthand for risk and behaviour. If AAPL trades at 150, a 130 call is deep in the money and moves almost dollar-for-dollar with the stock (delta near 1), while a 180 call is out of the money, cheap, and mostly a bet that things move fast before expiry. The further out of the money you go, the higher the odds the option expires worthless.

A common mistake is treating cheap out-of-the-money options as bargains. They are cheap because the market judges them unlikely to pay off, and theta grinds them down every day the underlying stays put. Moneyness tells you what you are actually buying, not whether it is a good deal.

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All options terms

Call Put Strike price Premium Expiration In the money (ITM)At the money (ATM)Out of the money (OTM)Intrinsic value Time value (extrinsic)Delta Gamma Theta Vega Implied volatility (IV)Open interest Assignment Exercise Spread Break-even Probability of profit (POP)Assignment risk / early assignment LEAPS Naked (uncovered) option Rho Historical volatility (HV)Volume Bid-ask spread Covered call Cash-secured put Vertical spread Iron condor Straddle Strangle Rolling Margin Max pain American-style option European-style option Contract multiplier Debit vs credit Volatility skew The Greeks Underlying Hedge Leverage Expected move Notional value Protective put Collar Butterfly spread Iron butterfly Calendar spread Diagonal spread Credit spread Debit spread Bull call spread Bear put spread Ratio spread Synthetic position The wheel strategy Poor man’s covered call (PMCC)Box spread Put-call parity Pin risk IV crush IV rank / IV percentile Ex-dividend date Deep in the money Weeklys 0DTE (zero days to expiration)Order types (to open / to close)Buying power reduction Cash settlement Market maker Slippage Mid price Black-Scholes model

Educational use only. Quotes are delayed ~15 minutes and nothing here is financial advice. Options trading involves substantial risk of loss.