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ITM OTM ATM simplified || Stockladder
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Moneyness of options simplified ⬇️⬇️⬇️
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There are three broad classifications –
1) In the Money (ITM)
2) At the Money (ATM)
3) Out of the Money (OTM)
All you need to do is figure out the intrinsic value. If the intrinsic value is a non zero number, then the option strike is considered ‘In the money’. If the intrinsic value is a zero the option strike is called ‘Out of the money’. The strike, which is closest to the Spot price, is called ‘At the money’.
Some of the important key points you should know:
- Any option that has an intrinsic value is classified as ‘In the Money’ (ITM) option.
- Any option that does not have an intrinsic value is classified as ‘Out of the Money’ (OTM) option.
- If the strike price is almost equal to spot price, then the option is considered as ‘At the money’ (ATM) option.
- All strikes lower than ATM are ITM options (for call options)
- All strikes higher than ATM are OTM options (for call options)
- All strikes higher than ATM are ITM options (for Put options)
- All strikes lower than ATM are OTM options (for Put options)
- The premiums for ITM options are always higher than the premiums for OTM option.
I hope this post is valuable. Save this for your future reference.
Dm “discord” to join ladder community for live trading and stock market courses
There are three broad classifications –
1) In the Money (ITM)
2) At the Money (ATM)
3) Out of the Money (OTM)
All you need to do is figure out the intrinsic value. If the intrinsic value is a non zero number, then the option strike is considered ‘In the money’. If the intrinsic value is a zero the option strike is called ‘Out of the money’. The strike, which is closest to the Spot price, is called ‘At the money’.
Some of the important key points you should know:
- Any option that has an intrinsic value is classified as ‘In the Money’ (ITM) option.
- Any option that does not have an intrinsic value is classified as ‘Out of the Money’ (OTM) option.
- If the strike price is almost equal to spot price, then the option is considered as ‘At the money’ (ATM) option.
- All strikes lower than ATM are ITM options (for call options)
- All strikes higher than ATM are OTM options (for call options)
- All strikes higher than ATM are ITM options (for Put options)
- All strikes lower than ATM are OTM options (for Put options)
- The premiums for ITM options are always higher than the premiums for OTM option.
I hope this post is valuable. Save this for your future reference.
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