Definition
Moneyness
Moneyness describes where an option's strike sits relative to the current price — in, at, or out of the money.
For a call, strikes below the spot are in-the-money, the nearest strike is at-the-money, and strikes above are out-of-the-money; for a put it is the mirror image. Moneyness drives the entire character of an option — its delta, its decay rate, and how much of its premium is real versus hope.
On the NSE option chain, traders scan moneyness to pick strikes: at-the-money for directional bets with balanced cost, deep out-of-the-money for cheap lottery-style trades on Bank Nifty expiry, and in-the-money when they want delta close to the underlying.
Related terms
- DeltaDelta measures how much an option's premium changes for a ₹1 move in the underlying stock or index.
- Intrinsic Value vs Time ValueAn option's premium splits into intrinsic value (the real in-the-money amount) and time value (everything else).
- Option ChainAn option chain is the full table of all available call and put strikes for a contract, with their prices and data.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.