Education Series

Education Series on Derivative Contracts

In the Money:

A contract is in the money when the contract is in favour of the buyer, that is a profit could be made by trading or exercising his rights.

In fact, it depends on the difference between the strike price and the exercise value and hence will differ in the case of call option and put option. A call option is in the money when the settlement value of the asset is higher than the strike price.

A put option will be in the money when the settlement value is lower than the strike price.