# Put option in the money

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Out-Of-The-Money Definition of "In the Money Call": A call option is said to be in the money when the current market price of the stock is above the strike price of the call. It is "in the money" because the holder of the call has the right to buy the stock below its current market price.

What Strike Prices are Out of the money and what is the effect? Is it a special kind of option or is it a special way of referring to certain kinds of options?

When you have the right to buy anything below the current market price, then that right has value. That value is also referred to as the option's "intrinsic value.

In the world of call options, your call options are "in the money" when the strike price of your calls are less than the current market price of the stock. The amount that your call options' strike price is below the current stock price is called its "intrinsic value" because you know it is worth at least that amount.

This compares to an out of the money call option which is call option where the strike price of the call is above the stock's current market price.

Definition of "In The Money Put": A put option is said to be in the money when the strike price of the put is above the current price of the underlying stock. It is "in the money" because the holder of this put has the right to sell the stock above its current market price. When you have the right to sell anything above its current market price, then that right has value.

That "intrinsic value is equal to at least the amount that your strike price is above the market price. In the world of put options, your put option is "in the money" when the strike price of your put is above the current market price of the stock.

The amount that your put option's strike price is above the current stock price is called its "intrinsic value" because you know it is worth at least that amount. Why are they in the money or ITM?

They are ITM because those call options already have an intrinsic value. This in the money value put option in the money a minimum or floor price for that option. Why are they in the money?

Every time. NerdWallet, Inc.

This value establishes a minimum or floor price for that option.