ITM / ATM / OTM Explained
Understanding in-the-money (ITM), at-the-money (ATM), and out-of-the-money (OTM) options is essential for choosing the right strikes.
In The Money (ITM)
Options with intrinsic value.
- High delta, expensive, move like stock
- For calls: Strike price < Current stock price
- For puts: Strike price > Current stock price
At The Money (ATM)
Strike closest to current stock price.
- Fastest gamma, high time decay
- Most sensitive to price movements
- Strike price ≈ Current stock price
Out of The Money (OTM)
Cheapest, no intrinsic value.
- High risk, used for spreads or selling
- For calls: Strike price > Current stock price
- For puts: Strike price < Current stock price
Related Fundamentals
- Options Pricing — How ITM/ATM/OTM affects intrinsic value
- The Greeks — How delta changes with ITM/ATM/OTM