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What is ATM (AT The Money) Options?

ATM are those options having Strike near to Spot Price. Current Price and Underlying is near. Example : NIfty is trading at 16970 Put Option : 17100                    ITM 17000                    ATM 16900                    OTM ATM Option has Delta Value 0.50 why ??? Because Probability of Nifty going up or down from Current Price is 1/2 i.e. 50% Call Option : 17100                     OTM 17000                     ATM 16900                     ITM  For Option video : https://youtu.be/XbwnxRLp7L8 Exercise : Reliance : CMP 2200 Rs PUT Option : 1800 2100 2200 2500 Call Option : 2000 2100 2200 2400 You can Comment here for more updates and Query on any option related Topics.

SIMPLE PAY OFF OF CALL AND PUT OPTION.....

WHAT IS PAY OFF FOR CALL OPTION AND PUT OPTION:

Example: Nifty is expiry at 15000

pay off for call option of 14800 and put option of 15200 will be as under.

Call payoff= Current price - Strike price

15000-14800 = 200 is intrinsic value of option.

Put payoff= strike price - current price 

15200- 15000 = 200 is intrinsic value of put option.

In call option below current price will be having intrinsic value and considered In the Money on expiry 

while,

Put option above current price will be having intrinsic value on expiry and considered as In the Money option.

On expiry day Options hold only Intrinsic value in ITM, while OTM option has some time value. so, clear concept of ITM, ATM & OTM before doing trade in options.

ITM option is having big part of Intrinsic value while ATM option hold more of TIME value and OTM option hold only TIME value.

Example : 

Nifty at trading at 14950

Nifty 15000 CE : 150 Rs Premium is consider only Time value and Strike is near to Current price so it is At The Money option.

Nifty 14700 CE : 280 Rs premium is having Intrinsic value of (14950-14700 = 250 Rs. ) + Time value of 30 Rs. is consider In The Money option.

Nifty 15200 CE : 40 Rs Premium is far from current Price is Out The Money Option holding only TIME value.
 
Exercise: 
Consider payoff of call option 
Nifty trading at 15100
Call option 14800
call option 15900
call option 15050

For put option nifty at 15100
Put option 14900
Put option 15450
Put option 15100

Do exercise to make concept clear. Comment below if you have any query and problem.

Mail at richideas100@gmail.com





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