Moneyness Explained: Meaning, Types, Process, and Risks
Moneyness is the language traders use to describe how an option’s strike price compares with the current market price of the underlying asset. It is the idea behind terms like *in the money*, *at the money*, and *out of the money*, and it affects option value, hedge design, risk, and strategy selection. If you understand moneyness well, you can read an options chain more intelligently and choose strikes with purpose instead of guesswork.