Out of the money
A call option whose strike price is higher than the market price of the underlying security, or a put option whose strike price is lower than the market price of the underlying security.
In the Money
Situation in which an option’s strike price is below thecurrent market price of the underlier (for a call option) or above the current market price of the underlier (for a put option). Such an option has intrinsic value.
At the Money
A condition in which the strike price of an option is equal to (or nearly equal to) the market price of the underlying security.
Strike Price
The specified price on an option contract at which the contract may be exercised, whereby a call option buyer can buy the underlier or a put option buyer can sell the underlier. The buyer’s profit from exercising the option is the amount by which the strike price exceeds the spot price (in the case of a put), or the amount by which the spot price exceeds the strike price (in the case of a call). In general, the smaller the difference between spot and strike price, the higher the option premium. also called exercise price.
