What are ITM/ OTM and ATM contracts? How can we define them in a particular category?

Options Classification:

1. In The Money (ITM)

• An option is considered "In The Money" (ITM) if it has intrinsic value.
• A call option is ITM if the stock price is higher than the strike price.
• A put option is ITM if the stock price is lower than the strike price.

2. At The Money (ATM)

• An option is "At The Money" (ATM) if the strike price is almost the same as the stock price.
• This applies to both call and put options.

3. Out of The Money (OTM)

• An option is "Out of The Money" (OTM) if it does not have intrinsic value.
• A call option is OTM if the stock price is lower than the strike price.
• A put option is OTM if the stock price is higher than the strike price.

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