Option Moneyness: ITM, OTM, & ATM Explained

The Automated Trading Podcast by Advanced AutoTrades

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This episode primarily explains option moneyness, categorising options as in-the-money (ITM), out-of-the-money (OTM), or at-the-money (ATM) based on the strike price's relationship to the underlying stock price. It clarifies how these classifications apply differently to call options and put options, offering examples to illustrate each type. Furthermore, the source differentiates between intrinsic value and extrinsic value in option pricing, highlighting that only ITM options possess intrinsic value, while extrinsic value encompasses factors like time decay and volatility. The hosts aim to provide a foundational understanding for traders by using practical examples and discussing how trading platforms visually represent these concepts.

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The content on this channel is for educational purposes only. Advanced Autotrades IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER. Neither Advanced AutoTrades nor any of its owners or employees is registered as a securities broker-dealer, broker, investment advisor (IA), or IA representative with the U.S. Securities and Exchange Commission or any state securities regulatory.