What is Moneyness of Options?

Moneyness is a measure of the degree to which a derivative is likely to have positive monetary value at its expiration. This can be divided in 3 types:

1. In The Money (ITM): has positive intrinsic value as well as time value.
2. At The Money (ATM): If the strike price is the same as the spot price of the underlying security on which the option is written. An at-the-money option has no intrinsic value, only time value the money.
3. Out Of The Money (OTM): An out-of-the-money option has no intrinsic value and will have a positive time value.
Check out NSE Academy Certified Option Strategies for better understanding of Moneyness.

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