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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
An option with intrinsic value. Calls when stock is above strike; puts when below.
Why It Matters
ITM options have real, exercisable value right now. A $100 call is ITM if the stock is at $110 - it's worth at least $10 intrinsically. ITM options are more expensive but safer because they have built-in value that won't evaporate from time decay alone.
Key Points
- ITM calls: stock price > strike price (you can buy below market)
- ITM puts: stock price < strike price (you can sell above market)
- ITM options have higher delta (more responsive to stock moves) and cost more upfront
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Common Questions
An option with intrinsic value. Calls when stock is above strike; puts when below. ITM options have real, exercisable value right now. A $100 call is ITM if the stock is at $110 - it's worth at least $10 intrinsically.
ITM options have real, exercisable value right now. A $100 call is ITM if the stock is at $110 - it's worth at least $10 intrinsically. ITM options are more expensive but safer because they have built-in value that won't evaporate from time decay alone.
ITM calls: stock price > strike price (you can buy below market)
ITM puts: stock price < strike price (you can sell above market)
ITM options have higher delta (more responsive to stock moves) and cost more upfront