InvestorQ : What is the difference between ITM, ATM and OTM options?
Abhi Yadav made post

What is the difference between ITM, ATM and OTM options?

Answer
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rhea Babu answered.
1 year ago


This is a very important classification when it comes to options. In-the-money (ITM) call options are those where the market price is higher than the strike price. The Out of the money (OTM) call option is one where the market price is lower than the strike price. If market price of Infosys is Rs.1000, then 980 Call Option will be ITM while 1020 Call Option will be OTM. ATM option is own where the stock price and exercise are exactly the same or at around the same level. The option pricing is largely dependent on whether the option is ATM, ITM or OTM. In case of put options, the logic of ITM and OTM will be exactly the reverse of what it is in case of put options. For example, continuing with the example of Infosys, if market price of Infosys is Rs.1000, then 980 Call Option will be OTM while 1020 Call Option will be ITM.