GLOSSARY // Options
In the Money (ITM)
An option is in the money when it has intrinsic value: a call with the stock above its strike, a put with the stock below it. The deeper in the money, the more the option trades like the stock itself.
ITM options cost more than at- or out-of-the-money options because part of the price is real, exercisable value rather than hope. Their deltas run from about 0.50 toward 1.00 as they go deeper, so a deep ITM call captures nearly the full dollar of every move in the shares — a common way to get stock-like exposure for less capital.
A stock trades at $75. The 70 call is in the money by $5.00 and might cost $6.10 ($5.00 intrinsic + $1.10 extrinsic) with a delta near 0.78. The 80 put is also in the money by $5.00. Meanwhile the 80 call is out of the money — same stock, opposite side of the strike ladder.
Related terms
Educational only — not financial advice. Definitions simplified for clarity; markets are messier than definitions.