In-the-Money (ITM)

In-the-Money (ITM) means an option contract has intrinsic value—it would make money if you exercised it right now. For a call option (the right to buy), ITM means the stock price is above the strike price (the agreed purchase price). For a put option (the right to sell), ITM means the stock price is below the strike price. You'll hear this term constantly when trading options, since ITM options are worth more than out-of-the-money ones. For example, if you own a call option to buy stock at $50 and the stock trades at $55, you're in-the-money by $5. It matters because ITM options have real value you could capture by selling or exercising them.