# The spot price of an option is. Valuation of options - Wikipedia

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Moneyness[ edit ] Moneyness is the value of a financial contract if the contract settlement is financial. More specifically, it is the difference between the strike price of the option and the current trading price of its underlying security.

In options trading, terms such as in-the-money, at-the-money and out-of-the-money describe the moneyness of options. A call option is in-the-money if the strike price is below the market price of the underlying stock.

A put option is in-the-money if the strike price is above the market price of the underlying stock. A call or put option is at-the-money if the stock price and the exercise price are the same or close. A call option is out-of-the-money if the strike price is above the market price of the underlying stock.

A put option is out-of-the-money if the strike price is below the market price of the underlying stock. Mathematical formula[ edit ] A call option has positive monetary value at expiration when the underlying has a spot price S above the strike price K.

Since the option will not be exercised unless it is in-the-money, the payoff for a call option is max.