Definition of In The Money

In The Money is a relationship between the strike price of an option and the underlying security’s price. A call is in the money when the strike price is lower than the security’s price. A put is in the money when the strike price is higher than the security’s price.

Applying "In The Money" to Securities Exams:

when an option is said to be In The Money it is not describing the profitability of an option position but simply the relationship of the the underlying stock price to the option’s strike price. Options that are in the money are more valuable than options that are at the money or out of the money because in the money options have intrinsic value.

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