In-the-money

Posted in Finance, Accounting and Economics Terms, Total Reads: 774
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Definition: In-the-money

A call option is said to be in-the-money when the current market price of the asset is above the exercise price.

A put option is said to be in-the-money when the current market price of the asset is below the exercise price.


Example:

As an example, if a person buys a call option on a stock at a strike price of $50 and the current market price is $55, then the person can buy the stock for $50 and can sell it at $55 thus gaining $5. In such a case, the call option is said to be in-the-money.




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