In the money

One of the three descriptions of moneyness, the relationship between an option's strike and the current price of the thing it is written on. A call is in the money when the underlying trades above the strike, a put when it trades below. At the money means the two are level, or near enough that convention treats them as level, and out of the money is the remaining case. Moneyness is a statement about where the price is now, and it changes continuously as the price moves.

The in the money amount is the option's intrinsic value, and it is floored at zero, since an option confers a right rather than an obligation and nothing forces it to be exercised at a loss. The remainder of the premium is time value, which reflects the possibility of further movement before expiry and falls away as expiry approaches. An option that is in the money therefore always has intrinsic value above zero, and one that is not has a price consisting of time value alone.

In the money is not the same as profitable, which is the error to guard against. The test compares the strike with the current price and takes no account of the premium paid to acquire the option, so a position can be in the money and still worth less than it cost. Conventions also differ about the reference price: spot moneyness compares the strike with the current price, forward moneyness with the forward price, and the two disagree by the cost of carry, which matters most on long dated contracts. A contract for difference has no strike at all, so moneyness does not apply to one.