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Welcome to your source for answers to questions about option concepts, strategies, and terminology. A new question and answer is published each week. To view the Ask the Institute archives, click the "Ask the Institute Archive" link below.

Please note, questions WILL NOT be personally answered and may not be chosen for publication on the web site.

View the archive of all "Ask the Institute" questions.


This week's question:

DATE: October 10, 2014


How do the terms in, at, and out-of-the-money describe the relationship of the strike price of an options to the current stock price?

The terms in, at, and out-of-the-money describe the relative price relationship of different options at a specific point in time. For example, with a stock price of $55, the 50 Call is in-the-money, because its strike price is below the stock price of $55. The 55 Call is considered at-the-money, because its strike price is at the stock price of $55. And, the 60 Call is considered out-of-the-money, because its strike price is above the stock price of $55. To learn more about in, at, and out-of-the-money options, view this segment of "Ask the Institute."

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