Moneyness

Moneyness refers to the intrinsic value of an options contract in relation to the current price of the underlying asset. It describes whether an option is "in the money" (profitable), "at the money" (no profit or loss), or "out of the money" (not profitable). For a call option, being in the money means the underlying asset's price is above the strike price, while for a put option, it means the asset's price is below the strike price.

Example

A call option with a strike price of $50 is "in the money" if the underlying stock is trading at $60, as the option holder can buy the stock at a lower price than the market value.