Basics

Moneyness: ITM, ATM, and OTM

Moneyness describes how a strike relates to the current price of the underlying. It tells you whether an option already has intrinsic value or consists only of time value.

Classification

What ITM, ATM, and OTM actually mean

ITM means in the money: the option already has intrinsic value. ATM means at the money: price and strike are roughly equal. OTM means out of the money: the option has no intrinsic value.

For calls and puts, the logic is mirrored. A call is ITM when spot is above strike. A put is ITM when the strike is above spot.

A simple example with spot at 100 EUR

  • Call strike 90 ITM because you could buy below the market.
  • Call strike 100 ATM because spot and strike are roughly equal.
  • Call strike 110 OTM because exercise has no benefit right now.
  • Put strike 110 ITM because you could sell above the market.
  • Put strike 90 OTM because selling at 90 is unattractive right now.

Same spot, opposite logic

Same spot, opposite logicSpot 100 EUR. At strike 90 the call is ITM and the put OTM. At strike 100 both are ATM. At strike 110 the call is OTM and the put ITM.Spot = 100 EURCALLITM10 EURATM0 EUROTM0 EURPUTOTM0 EURATM0 EURITM10 EUR90100110Strike (EUR)
  • ITM = In the money
  • ATM = At the money
  • OTM = Out of the money
Amounts show intrinsic value per share. The vertical spot line passes through both ATM fields. Moneyness depends on spot versus strike, not on being long or short. ITM means intrinsic value, not necessarily a profit after premium.