Options can be "in the money" (ITM) or "out of the money" (OTM) depending on where the current stock price is relative to the strike price 📊

“In the money” options are options that you can exercise for a profit

“Out of the money” options are options that you can’t exercise 🏋️

A call option is "in the money" if the current stock price is ABOVE the strike price 📈

For example, if you have a call option on Apple with a strike price of $150 and Apple’s stock price is $160, the option is in the money because you can exercise it 🍎

A put option is "in the money" if the current stock price is BELOW the strike price 📉

So if you have a put option on Tesla with a strike price of $600 and Tesla’s stock price is $500, the option is in the money because you can also exercise it 🚗

"In the money" options have intrinsic value, which is the profit you would make by exercising the option 💵

Using the Tesla example, the intrinsic value of the put option is $100, because $600 (strike price) - $500 (current stock price) = $100 📊

Meanwhile, a call option is "out of the money" if the current stock price is BELOW the strike price, and a put option is “out of the money” if the current stock price is ABOVE the strike price

In both of those cases, you would not be able to exercise the option, so “out of the money” options also have no intrinsic value 🚫