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What is meant by "in the money," "at the money," and "out of the money" in options?

These terms refer to the moneyness of an option:

In the Money (ITM): When exercising the option is favorable (e.g., stock price > strike price for a call).

At the Money (ATM): When the stock price is close to the strike price.

Out of the Money (OTM): When exercising the option is not favorable (e.g., stock price < strike price for a call).

Last updated: 8 Months Ago

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