Figyan

CA Bigyan Kumar Mishra

is a fellow member of the Institute of Chartered Accountants of India.He writes about personal finance, income tax, goods and services tax (GST), stock market, company law and other topics on finance. Follow him on linkedin or facebook or instagram or twitter.

Near the Money

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"Near the money” refers to an option contract whose strike price is near or close to the current market price of the underlying security.A call option is near the money when its strike price is lower than the current market price but extremely close to it.A put option will be considered as near the money when the underlying securities strike price is higher than the … [Read more...] about Near the Money

What is Option Moneyness and How Does It Work?

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When you trade options, you need to understand certain terms to know if your investment is worth it. One of the most important terms is option moneyness. This simply tells you if an option has any real value compared to the price of the underlying asset. Understanding moneyness can help you make better trading decisions.Options are different from stocks because … [Read more...] about What is Option Moneyness and How Does It Work?

In the Money (ITM)

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In the money, which is also known as ITM, refers to an option that possesses intrinsic value.We have two types of ITMs;in-the-money call optionin-the-money put optionA call option will be in-the-money if the market price of the underlying security is above the strike price.For example, a call option with a strike price of Rs 300 will be considered as in the … [Read more...] about In the Money (ITM)

At The Money (ATM)

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At the money, which is also known as an ATM, is a situation where the option's strike price is the same as the underlying security's current market price.In other words, an ATM can be defined as calls and puts whose strike price is at or very near to the current market price of the underlying stock or security.ATM is also referred to as on-the-money.For example, if … [Read more...] about At The Money (ATM)

Out of the Money (OTM)

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Out of the money, which is also known as OTM, is a term used for an option contract that only contains extrinsic value. This means, it's an option contract which has no intrinsic value, only extrinsic value.We have two types of Out of the money options;OTM call optionOTM put optionIn an OTM call option, the strike price of the out of the money contract should be … [Read more...] about Out of the Money (OTM)