Moneyness describes the relationship between an Option’s strike price and the underlying asset’s current market price, classified as in-the-money (ITM), at-the-money (ATM), or out-of-the-money (OTM). It’s a live, continuously changing classification — not fixed at the time of purchase. Options trading on Indian exchanges is regulated by SEBI, which sets the margining and risk-disclosure framework that references ITM/OTM classification.
Related Reading
See the full breakdown, with the direction flip between Calls and Puts, in ITM, ATM, OTM Explained: Understanding Option Moneyness.
Example
With Nifty at 24,800, a 24,700 Call is ITM by 100 points (₹100 of intrinsic value), a 24,800 Call is ATM (no intrinsic value, only time value), and a 24,900 Call is OTM (also no intrinsic value). If Nifty moves to 24,850 by the next session, all three strikes' moneyness has shifted without anyone trading them.
Frequently Asked Questions
Does moneyness affect how expensive an option is?
Yes. ITM options cost more because their premium includes intrinsic value on top of time value, while ATM and OTM options are priced on time value and implied volatility alone.
Can an option change from OTM to ITM before expiry?
Yes, continuously. As the underlying's price moves, an option can shift between ITM, ATM, and OTM any number of times before expiry — moneyness is recalculated with every tick, not fixed at purchase.
Is moneyness the same for Calls and Puts at the same strike?
No, it flips. A strike above the current spot price is ITM for a Put but OTM for a Call, and a strike below spot is ITM for a Call but OTM for a Put — the direction of "in the money" depends on which side you hold.