How far in or out of the money is an option?
What does moneyness describe?
Moneyness describes where an option's strike sits relative to the current price of the underlying: in the money, at the money, or out of the money. It determines how much of the premium is intrinsic value and how much is time value, and it shifts with every move in the underlying.
Measuring the distance in percent
Moneyness is usually given as a label — in, at or out of the money — and the label hides the size. The useful figure is the distance between strike and share price, divided by the share price. A strike 10 € below a 100 € stock is 10 % away; the same 10 € below a 50 € stock is 20 % away. Only the percentage lets you compare strikes across stocks that trade at very different price levels.
Calls and puts mirror each other
A call is in the money when its strike sits below the share price, a put when its strike sits above it. At any one strike the call and the put are therefore on opposite sides: if the 90 € call is 10 € in the money, the 90 € put is 10 € out of the money. Only the in-the-money option carries intrinsic value; the other one is pure time value, and the split shifts with every move in the stock.
Where “at the money” gets fuzzy
Strictly, at the money means the strike equals the share price, which almost never happens exactly. In practice traders call the nearest listed strike at the money, so with strikes 5 € apart a stock at 102 € has its at-the-money strike at 100 €. Some platforms use delta instead and call anything near 0.50 at the money. Neither convention is wrong; when two sources disagree, they are usually using different definitions.
The common misreading
Moneyness is often read as a verdict: in the money is good, out of the money is bad. It is neither. A short put that is out of the money sits exactly where its seller wants it, and a deep in-the-money option behaves almost like the stock, with little of the leverage people buy options for. The label says where the strike sits today, not whether the position is working.
Worked example
Hypothetical numbers for illustration, not a market quote and not a recommendation.
An example stock trades at 100 €. The 90 € call is 10 € in the money, which is 10 % of the share price, and it carries 10 € of intrinsic value per share, or 1,000 € per contract. The 90 € put at the same strike is 10 % out of the money and has no intrinsic value at all.
On a second example stock trading at 50 €, a strike 10 € away is 20 % from the price: twice as far in relative terms, although the distance in euros is the same. Fees are ignored.
Strategies where the term matters
- Covered Call — Are you willing to hand over the shares at the call strike - even if they keep running afterwards?
- Cash-Secured Put — After a 30% drop, would the strike still be a price you actually want to pay?
- Bull Put Spread — Do you want a credit against an obligation - or would you rather pay a debit?
Calculators for this term
Track it in your journal
Related terms
Every term in one place: the options glossary.
This material is general information about option strategies, written for a general audience. It is not investment advice, not a recommendation, and not financial analysis. Options can lose their entire value, and uncovered positions can lose more than the amount committed. Anything said about tax is general in nature and is no substitute for professional tax advice. Last reviewed: 2026-08-06.