All lessonsLesson 3 · Step 1/5
Strikes & Expiration
In, at, and out of the money
In the money (ITM): the option already has real value. For a call, the stock is above the strike. For a put, below it.
At the money (ATM): the strike is closest to the current stock price.
Out of the money (OTM): the option has no real value yet — only hope. Cheaper, but needs a bigger move to pay off.
Example
SPY at $580: the $575 call is ITM, the $580 call is ATM, the $590 call is OTM.
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