{"id":7464,"date":"2025-05-21T17:14:37","date_gmt":"2025-05-21T11:44:37","guid":{"rendered":"https:\/\/www.torusdigital.com\/toruscope\/?p=7464"},"modified":"2025-07-03T20:01:49","modified_gmt":"2025-07-03T14:31:49","slug":"what-is-itm","status":"publish","type":"post","link":"https:\/\/www.torusdigital.com\/toruscope\/derivative-market\/what-is-itm\/","title":{"rendered":"What Are ITM Call Options and How Do They Work in Trading?"},"content":{"rendered":"<div class=\"wpb-content-wrapper\"><p><span data-contrast=\"auto\">A call option lets you purchase a stock at a fixed rate known as the strike price. If the stock\u2019s market price is higher than that rate, your option is considered &#8216;in the money&#8217;.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\r\n<p><span data-contrast=\"auto\">Let\u2019s break it down with numbers:<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\r\n<ul>\r\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"6\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">You buy a call option with a strike price of \u20b990<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\r\n<\/ul>\r\n<ul>\r\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"6\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">The stock is trading at \u20b9100<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\r\n<\/ul>\r\n<ul>\r\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"6\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"auto\">Your call is \u20b910 ITM<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\r\n<\/ul>\r\n<p><span data-contrast=\"auto\">That \u20b910 represents your intrinsic value, real profit potential, not just a number on paper.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\r\n<p><span data-contrast=\"auto\">So next time you hear someone say they bought an <\/span><span data-contrast=\"auto\">ITM call option<\/span><span data-contrast=\"auto\">, it simply means they\u2019re holding an option that already has value if exercised today.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\r\n<h2 aria-level=\"2\"><span class=\"ez-toc-section\" id=\"The_Working_of_ITM_Call_Option\"><\/span><span data-contrast=\"none\">The Working of <\/span><span data-contrast=\"none\">ITM Call Option<\/span><span data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559738&quot;:160,&quot;335559739&quot;:80}\">\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<p><span data-contrast=\"auto\">Alright, so you own an ITM call. Now what? There are a couple of ways this can play out:<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\r\n<ol>\r\n<li><b><span data-contrast=\"auto\">You sell the option.<\/span><\/b>\u00a0<br \/><span data-contrast=\"auto\">When your option is in the money, it may be attractive to other traders\u2014giving you the chance to sell it and lock in your gains.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\r\n<li data-leveltext=\"%1.\" data-font=\"\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:0,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[65533,0],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;%1.&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">You exercise it.<\/span><\/b>\u00a0<br \/><span data-contrast=\"auto\">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.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\r\n<li data-leveltext=\"%1.\" data-font=\"\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:0,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[65533,0],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;%1.&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">You hold until expiry.<\/span><\/b>\u00a0<br \/><span data-contrast=\"auto\">If your option stays ITM till expiration, you\u2019ll either be automatically exercised or settle in cash depending on how your broker\/platform handles it.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\r\n<\/ol>\r\n<p><span data-contrast=\"auto\">But here&#8217;s the catch: you still paid a premium to buy that option. So even if you\u2019re ITM, you need to calculate your <\/span><i><span data-contrast=\"auto\">net<\/span><\/i><span data-contrast=\"auto\"> profit (market price &#8211; strike price &#8211; premium paid).<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\r\n<h2 aria-level=\"2\"><span class=\"ez-toc-section\" id=\"Importance_of_ITM_Call_Option\"><\/span><span data-contrast=\"none\">Importance of <\/span><span data-contrast=\"none\">ITM Call Option<\/span><span data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559738&quot;:160,&quot;335559739&quot;:80}\">\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<p><span data-contrast=\"auto\">You might be wondering why does this even matter? Options trading is all about managing risk versus reward. <\/span><span data-contrast=\"auto\">ITM call options<\/span><span data-contrast=\"auto\"> usually offer:<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\r\n<ul>\r\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"3\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Less risky<\/span><\/b><span data-contrast=\"auto\"> than out-of-the-money (OTM) options<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\r\n<\/ul>\r\n<ul>\r\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"3\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Costlier upfront,<\/span><\/b><span data-contrast=\"auto\"> since they already carry intrinsic value<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\r\n<\/ul>\r\n<ul>\r\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"3\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">More stable<\/span><\/b><span data-contrast=\"auto\">\u2014they don\u2019t lose value as fast when the market moves against you<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\r\n<\/ul>\r\n<p><span data-contrast=\"auto\">If you&#8217;re just getting into options, starting with ITM calls can be a smart move. They\u2019re not as flashy as OTM options, but they\u2019re grounded. They behave more like the underlying stock and offer a better chance of profit, especially in volatile markets.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\r\n<h2 aria-level=\"2\"><span class=\"ez-toc-section\" id=\"How_to_Spot_an_ITM_Call_Option\"><\/span><span data-contrast=\"none\">How to Spot an <\/span><span data-contrast=\"none\">ITM Call Option?<\/span><span data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559738&quot;:160,&quot;335559739&quot;:80}\">\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<p><span data-contrast=\"auto\">Here\u2019s a quick tip on identifying an ITM call:<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\r\n<ul>\r\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"4\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">Check the <\/span><b><span data-contrast=\"auto\">strike price<\/span><\/b><span data-contrast=\"auto\"> of the option.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\r\n<\/ul>\r\n<ul>\r\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"4\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">Compare it to the current market price of the stock.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\r\n<\/ul>\r\n<ul>\r\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"4\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"auto\">When the stock&#8217;s current price is greater than the option\u2019s strike price, it&#8217;s ITM.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:true,&quot;134233118&quot;:true,&quot;201341983&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\r\n<\/ul>\r\n<p><span data-contrast=\"auto\">For example:<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\r\n<ul>\r\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">Stock price: \u20b9150<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\r\n<\/ul>\r\n<ul>\r\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">Call option strike price: \u20b9130<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\r\n<\/ul>\r\n<ul>\r\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"5\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"auto\">\u20b9150 &gt; \u20b9130 \u2192 That\u2019s an ITM call<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\r\n<\/ul>\r\n<p><span data-contrast=\"auto\">Pro tip: Most trading platforms will clearly label options as ITM, ATM (at the money), or OTM (out of the money). But it\u2019s still worth knowing how to spot them yourself.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\r\n<h2 aria-level=\"2\"><span class=\"ez-toc-section\" id=\"Final_Thoughts\"><\/span><span data-contrast=\"none\">Final Thoughts<\/span><span data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559738&quot;:160,&quot;335559739&quot;:80}\">\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<p><span data-contrast=\"auto\">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.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\r\n<p><span data-contrast=\"auto\">ITM options may not always be the most exciting trades on the board, but they\u2019re often the most reliable. And when it comes to building confidence in options trading, that\u2019s gold.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\r\n<p><span data-contrast=\"auto\">If you\u2019re 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.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\r\n<p><span data-contrast=\"auto\">Looking to enhance your trading game in F&amp;Os? Try out <\/span><a href=\"https:\/\/www.torusdigital.com\/\"><b><span data-contrast=\"none\">Torus Digital\u2019s<\/span><\/b><\/a><span data-contrast=\"auto\"> advanced algo-trading platform, designed specifically for pro traders.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\r\n<p><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\r\n<p><span style=\"font-size: revert; color: initial;\">\u00a0<\/span><\/p>\r\n\r\n\r\n<p class=\"wp-block-paragraph\">&nbsp;<\/p>\r\n\r\n\r\n<meta property=\"og:title\" content=\"What Are ITM Call Options? 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In options trading, an option is ITM when it has intrinsic value, meaning the strike price is favourable compared to the current market price of the underlying asset. For a call option, ITM means the market price is above the strike price; for a put option, ITM means the market price is below the strike price.[\/vc_column_text][\/vc_tta_section][vc_tta_section title=&#8221;How is an ITM call option different from an OTM option?&#8221; tab_id=&#8221;faq_itm_2&#8243;][vc_column_text css=&#8221;&#8221;]An ITM call option has a strike price lower than the current market price, so it has intrinsic value and can be exercised for a profit. An OTM (Out of the Money) call option has a strike price higher than the current market price, so it has no intrinsic value and cannot be exercised profitably unless the price moves favourably in the future.[\/vc_column_text][\/vc_tta_section][vc_tta_section title=&#8221;Are ITM options safer than OTM options?&#8221; tab_id=&#8221;faq_itm_3&#8243;][vc_column_text css=&#8221;&#8221;]Generally, ITM options are considered safer because they already have intrinsic value and are less likely to expire worthless. OTM options are cheaper but riskier, as they need a significant favourable price movement to become profitable.[\/vc_column_text][\/vc_tta_section][vc_tta_section title=&#8221;Can I exercise ITM call options for profit?&#8221; tab_id=&#8221;faq_itm_4&#8243;][vc_column_text css=&#8221;&#8221;]Yes, you can exercise ITM call options for profit, as they allow you to buy the underlying asset below its current market price. However, your actual profit will depend on the difference between the market price and the strike price minus the premium paid.[\/vc_column_text][\/vc_tta_section][vc_tta_section title=&#8221;Why do traders prefer ITM options in volatile markets?&#8221; tab_id=&#8221;faq_itm_5&#8243;][vc_column_text css=&#8221;&#8221;]Traders often prefer ITM options in volatile markets because these options are less likely to expire worthless and their intrinsic value provides a buffer against sudden adverse price movements. ITM options also tend to move more closely with the underlying asset, offering more predictable returns in fast-moving markets.[\/vc_column_text][\/vc_tta_section][\/vc_tta_accordion]\r\n<\/div>","protected":false},"excerpt":{"rendered":"A call option lets you purchase a stock at a fixed rate known as the strike price. If the stock\u2019s market price is higher than that rate, your option is considered &#8216;in the money&#8217;.\u00a0 Let\u2019s break it down with numbers:\u00a0 You buy a call option with a strike price of \u20b990\u00a0 The stock is trading","protected":false},"author":1,"featured_media":7484,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_sitemap_exclude":false,"_sitemap_priority":"","_sitemap_frequency":"","footnotes":""},"categories":[282],"tags":[],"class_list":["post-7464","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-derivative-market"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What Are ITM Call Options? 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