in the money

in the money
The situation in which an option has value because of the relationship between the option's strike price and the current market price for the underlying instrument, the spot price. A call option is in the money when the strike price is below the spot price. A put option is in the money when the strike price is above the spot price. American Banker Glossary
Options and covered warrants have a 'positive intrinsic value'. In a call option / warrant, the underlying asset price exceeds the exercise price. In a put option / warrant, the underlying asset price is less than the exercise price. For a Call covered warrant, this is where the strike price is less than the price of the underlying. For a Put covered warrant, this is where the strike price is greater than the price of the underlying. London Stock Exchange Glossary
A warrant with an exercise price below (for a call warrant) or above (for a put warrant) the price of the underlying security. NYSE Euronext Glossary

* * *

   An option is described as being in the money when the current price of the underlying instrument is above the strike or exercise price for a call, and below the strike price for a put. For example, the shares of Company A are trading at £2.20 each. A trader decides to write an option on the shares, giving the buyer the right to buy the shares of Company A at £2.40 each. That is a call option, because the buyer has the right to 'call' or buy the shares at £2.40 each. The exercise, or 'strike' price, for the option is £2.40. If the price of the underlying shares rises to £2.50 then the option is 'in the money' and the holder will exercise the option because the strike price is below the market price of the shares. A put option is when a trader writes an option giving the buyer the right to sell the shares to him at a given price. The buyer has the right to sell or 'put' the shares to the option writer. If the strike price of the option is £2.20 and the price of the underlying shares falls to £2.00 in the open marketplace then the put option is 'in the money' or valuable because the holder can make more money by exercising the option and selling at £2.20 then he can by selling in the market at £2.00. In both examples the buyer of the options has to make allowance for the cost of the options themselves before calculating whether it is worthwhile to exercise them. Options can also be described as being deep in the money when they are likely to expire in the money.
   ► See also Out of the Money, At the Money.

* * *

in the money
FINANCE options are in the money when they could be used to buy or sell shares for a profit: »

In traditional stock option plans, unless options are in the money, they are not exercised.

INFORMAL having a lot of money: »

It's not just the oil companies that are in the money: high oil prices boost government revenue.

Main Entry: money

Financial and business terms. 2012.

Игры ⚽ Поможем написать реферат

Look at other dictionaries:

  • The Money Maze — Format Game show Created by Don Lipp Ron Greenberg Directed by Arthur Forrest Presented by Nick Clooney Narr …   Wikipedia

  • The Money Programme — The logo as of 2008 Genre Finance Business Affairs Presented by Max Flint Libby Potter Opening theme …   Wikipedia

  • The Money Well — is a Scrooge McDuck comic strip story written by Carl Barks. Storyline Scrooge and his nephews are at his Money Bin where they find out that The Beagle Boys are using oil rigs to steal Scrooge s Money. Scrooge and his nephews use the secret… …   Wikipedia

  • The Money-Maker Recipe — 師奶股神 The Money Maker Recipe poster Genre Modern Drama Starring Kiki Sheung Michael Tse …   Wikipedia

  • The Money Dragon — is a historical fiction novel written by Pam Chun in 2002. It tells the story of a Chinese immigrant, Lau Ah Leong, through the eyes of his daughter in law.Book Structure The Money Dragon opens with a foreword by former U.S. Senator Hiram Fong.… …   Wikipedia

  • The Money-Order with White Genesis — The money order : with, White genesis ( fr. Le mandat, précédé de Vehi Ciosane ) is a book containing two novellas by Senegalese author Ousmane Sembene, first published in French in 1966. An English language translation was published in 1987. It… …   Wikipedia

  • The Man, the Woman and the Money — (Oggi, domani, dopodomani) original dvd cover Directed by Eduardo De Filippo Marco Ferreri Luciano Salce …   Wikipedia

  • The Money Machine — was a show on ZDTV, and later TechTV, hosted by Carmine Gallo. The show offered investment advice to viewers, predominantly on how to begin investing via the internet. When TechLive debuted in 2001, The Money Machine was discontinued in favor of… …   Wikipedia

  • The Money Lenders — 1981 is a book by British journalist Anthony Sampson that looks at the history of banking from the Renaissance to a meeting of the International Monetary Fund in Washington DC in 1980, with an emphasis on the interaction of finance with… …   Wikipedia

  • The Money or the Gun — was an Australian comedy / talk show on the ABC network in 1989 1990, with occasional specials until 1994. It was written by Andrew Denton, Simon Dodd, Bruce Griffiths, and George Dodd, directed by Martin Coombes and produced by Mark… …   Wikipedia

  • The Money Personality — est un ouvrage sur le succès financier écrit en 1972 par A. E. van Vogt (Canada), et n est pas traduit en français. Résumé Après plusieurs années d observation, l auteur révèle les douze clés du succès des autodidactes millionnaires, clés qui… …   Wikipédia en Français

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”