Wednesday, February 11, 2009

Strike Price Graph



This is a graphic of an option's Strike Price graph. As you can see the middle price of $100 is the stock price. "ATM" is "At The Money". This means the option purchased by an investor to be bought or sold has a strike price that equals the stock price. An option that is ITM has "intrinsic value". "ITM" means "In The Money". A call option is ITM when the Exercise Price is below the current Stock Price. A put option is ITM when the Exercise Price is above the current Stock Price. "OTM" means "Out of the Money", a call option is OTM when the Strike Price is higher than the current stock price. A put option is OTM when the Strike Price is lower than the current stock price.

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