What Are ITM Call Options and How Do They Work in Trading?

A call option lets you purchase a stock at a fixed rate known as the strike price. If the stock’s market price is higher than that rate, your option is considered ‘in the money’. 

Let’s break it down with numbers: 

• You buy a call option with a strike price of ₹90 

• The stock is trading at ₹100 

• Your call is ₹10 ITM 

That ₹10 represents your intrinsic value, real profit potential, not just a number on paper. 

So next time you hear someone say they bought an ITM call option, it simply means they’re holding an option that already has value if exercised today. 

The Working of ITM Call Option 

Alright, so you own an ITM call. Now what? There are a couple of ways this can play out: 

1. You sell the option. 
   When your option is in the money, it may be attractive to other traders—giving you the chance to sell it and lock in your gains. 
2. You exercise it. 
   You can choose to buy shares at your lower strike price and sell them immediately at the market rate, capturing the price difference as profit. 
3. You hold until expiry. 
   If your option stays ITM till expiration, you’ll either be automatically exercised or settle in cash depending on how your broker/platform handles it. 

But here’s the catch: you still paid a premium to buy that option. So even if you’re ITM, you need to calculate your net profit (market price – strike price – premium paid). 

Importance of ITM Call Option 

You might be wondering why does this even matter? Options trading is all about managing risk versus reward. ITM call options usually offer: 

• Less risky than out-of-the-money (OTM) options 

• Costlier upfront, since they already carry intrinsic value 

• More stable—they don’t lose value as fast when the market moves against you 

If you’re just getting into options, starting with ITM calls can be a smart move. They’re not as flashy as OTM options, but they’re grounded. They behave more like the underlying stock and offer a better chance of profit, especially in volatile markets. 

How to Spot an ITM Call Option? 

Here’s a quick tip on identifying an ITM call: 

• Check the strike price of the option. 

• Compare it to the current market price of the stock. 

• When the stock’s current price is greater than the option’s strike price, it’s ITM. 

For example: 

• Stock price: ₹150 

• Call option strike price: ₹130 

• ₹150 > ₹130 → That’s an ITM call 

Pro tip: Most trading platforms will clearly label options as ITM, ATM (at the money), or OTM (out of the money). But it’s still worth knowing how to spot them yourself. 

Final Thoughts 

To sum it up, an ITM option already holds real worth and can give you a profitable edge if used wisely. Specifically, for a call option, it means the market price is above your strike price, giving you an edge. 

ITM options may not always be the most exciting trades on the board, but they’re often the most reliable. And when it comes to building confidence in options trading, that’s gold. 

If you’re just getting started, look into ITM strategies. Play it smart. Learn the ropes. And remember that sometimes, a small win is better than a flashy loss. 

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