Definition, Meaning & Synonyms
in-the-money
Adjective
in-thÉ™-muh-nee
Definition
A term used in finance to describe an option that has intrinsic value, indicating that exercising the option would lead to a positive payoff.
Examples
- A call option on a stock is in-the-money if the stock price exceeds the strike price.
- The investor was excited because her put option was in-the-money when the market dropped.
- To maximize profit, he decided to exercise his in-the-money options before expiration.
Meaning
The phrase ‘in-the-money’ primarily refers to financial options that are currently profitable due to favorable market conditions. For call options, this means the current market price of the underlying asset is higher than the strike price; for put options, it means the market price is lower than the strike price.
Synonyms
- Profitable
- Favorable
- Valuable
