Option Moneyness

Option moneyness describes the relationship between an option's strike price and the current market price of the underlying asset — indicating whether exercising the option would currently be profitable (In the Money), breakeven (At the Money), or unprofitable (Out of the Money). For a call option: ITM when spot is above strike, ATM when spot equals strike, OTM when spot is below strike. For a put option: ITM when spot is below strike, ATM when spot equals strike, OTM when spot is above strike. Moneyness is a primary determinant of an option's premium — ITM options carry intrinsic value plus time value, ATM options have only time value, and OTM options have only time value which decays to zero at expiry if the option remains out of the money. In Indian F&O markets, option moneyness is used to classify Nifty 50 and Bank Nifty options for strategy selection — at-the-money options are preferred for straddles and strangles, while deep ITM options behave similarly to futures and are used for synthetic position construction.