"In the money" redirects here. For the poker term, see In the money (poker).
Difference in the price of an underlying asset from its derivative's strike price
In finance, moneyness is the relative position of the current price (or future price) of an underlying asset (e.g., a stock) with respect to the strike price of a derivative, most commonly a call option or a put option. Moneyness is firstly a three-fold classification:
If the derivative would have positive intrinsic value if it were to expire today, it is said to be in the money;
If the derivative would be worthless if expiring with the underlying at its current price, it is said to be out of the money;
And if the current underlying price and strike price are equal, the derivative is said to be at the money.
There are two slightly different definitions, according to whether one uses the current price (spot) or future price (forward), specified as "at the money spot" or "at the money forward", etc.
This rough classification can be quantified by various definitions to express the moneyness as a number, measuring how far the asset is in the money or out of the money with respect to the strike – or, conversely, how far a strike is in or out of the money with respect to the spot (or forward) price of the asset. This quantified notion of moneyness is most importantly used in defining the relative volatility surface: the implied volatility in terms of moneyness, rather than absolute price. The most basic of these measures is simple moneyness, which is the ratio of spot (or forward) to strike, or the reciprocal, depending on convention. A particularly important measure of moneyness is the likelihood that the derivative will expire in the money, in the risk-neutral measure. It can be measured in percentage probability of expiring in the money, which is the forward value of a binary call option with the given strike, and is equal to the auxiliary N(d2) term in the Black–Scholes formula. This can also be measured in standard deviations, measuring how far above or below the strike price the current price is, in terms of volatility; this quantity is given by d2. (Standard deviations refer to the price fluctuations of the underlying instrument, not of the option itself.) Another measure closely related to moneyness is the Delta of a call or put option. There are other proxies for moneyness, with convention depending on market.[1]
^Cite error: The named reference neftci was invoked but never defined (see the help page).
quantified notion of moneyness is most importantly used in defining the relative volatility surface: the implied volatility in terms of moneyness, rather than...
terms such as in-the-money, at-the-money and out-of-the-money describe the moneyness of options. A call option is in-the-money if the strike price is...
Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular...
Money laundering is the process of illegally concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement...
"The Money" is the 146th episode of the sitcom Seinfeld. This was the 12th episode for the eighth season, originally airing on NBC on January 16, 1997...
MoneyMoney 2020 is the debut studio album by new wave band The Network, a side project of the band Green Day. It was released on September 30, 2003,...
In It for the Money is the second studio album by English alternative rock band Supergrass, released in 1997. NME called it "more fun than watching a...
with a given absolute strike does not change. "sticky moneyness" (aka, "sticky delta"; see moneyness for why these are equivalent terms): if spot changes...
On the Money is the name of several finance- and business-focused television series: On the Money (2005 TV program), an American daily personal finance...
In macroeconomics, money supply (or money stock) refers to the total volume of money held by the public at a particular point in time. There are several...
Jermaine Thompkins (born September 14, 1972), known by his stage name JT Money, is an American rapper and the leader of Miami-based hip hop group Poison...
Hush money is a term for an arrangement in which one person or party offers another an attractive sum of money or other enticement, in exchange for remaining...
A moneyer is a private individual who is officially permitted to mint money. Usually the rights to coin money are bestowed as a concession by a state...
provides an estimate of the price of European-style options. Covered call Moneyness Naked call Naked put Option time value Pre-emption right Put option Put–call...
the swap, at time m, would have an "NPV" of zero; see swap valuation. Moneyness, therefore, is determined based on whether the strike rate is higher,...
Money plant may refer to several species, including: This page is an index of articles on plant species (or higher taxonomic groups) with the same common...
Money printing may refer to: Money creation to increase the money supply Debt monetization, financing the government by borrowing from the central bank...
Dumb Money is a 2023 American biographical comedy-drama film directed by Craig Gillespie and written by Lauren Schuker Blum and Rebecca Angelo. It is...
Look up blood money in Wiktionary, the free dictionary. Blood money may refer to: Blood money (restitution), money paid to the family of a murder victim...
economics, broad money is a measure of the amount of money, or money supply, in a national economy including both highly liquid "narrow money" and less liquid...
Representative money or receipt money is any medium of exchange, printed or digital, that represents something of value, but has little or no value of...
YooMoney branded as ЮMoney, formerly known as Yandex.Money (Russian: Яндекс.Деньги), is Russia's second largest electronic payment service after "Sberbank...
John William Money (8 July 1921 – 7 July 2006) was a New Zealand American psychologist, sexologist and professor at Johns Hopkins University known for...
Sapna MoneyMoney (lit. 'Our Dream is [only] Money and Money') is a 2006 Indian Hindi-language comedy film directed by Sangeeth Sivan. Apna Sapna Money Money...