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At the money

In the Money vs. At the Money Options: An Example

In the money vs. at the money options In the money options are options which have positive intrinsic value. This means that at the moment of expiration (when no time value is left), the option still represents some value if you exercise it. At the money options are options with strike price equal or very … Read more


Time Value of In The Money Put Options

Call options In the previous article we have explained why time value of at the money call options is higher than time value of deep in the money call options (other factors being equal). The reason is that the closer to at the money an option is, the more it limits your maximum risk from … Read more


Time Value of In The Money Call Options

What does time value of options depend on? While an option’s intrinsic value is easy to calculate just by looking at its strike price and the underlying’s market price, time value doesn’t have any simple and quick formula like this. There are more factors influencing time value of an option. Among the most important are … Read more


Put Option Price, Intrinsic, and Time Value

This is the second part of the article about calculating intrinsic and time value of options. Here you can read the first part: Call Option Price, Intrinsic, and Time Value. In the money put option example Now consider a put option (giving the owner a right to sell) on J.P. Morgan stock, expiring in December … Read more


In the Money, At the Money, Out of the Money

Moneyness of an option Moneyness is a strange sounding term, but it is sometimes used for describing the amount of intrinsic value an option has. All options belong to one of the three basic groups (and they can move between these groups as the market price of the underlying changes, as you will see below). … Read more