Call Option: Is in-the-money term same for Seller vs Buyer?


The Intrinsic Value of an option refers to how much in-the-money the option is.

  • For a call, it's the Current Price of the underlying less the Strike Price

  • For a put, it's the Strike Price less the Current Price of the underlying For options that are out-of-the-money or at the money, the Intrinsic Value is zero.

The Time Value of an option is the Option Premium less the Intrinsic Value (if any). For options that are at-the-money (ATM) or out-of-the-money (OTM), the premium will be equal to the Time Value.

It makes no difference whether you are the buyer or the seller.


In-the-money means the same whether you're the buyer (you have a long position) or the seller (you have a short position). The buyer wants the option to be in the money when it expires; the seller wants the option to be out of the money when it expires.

For a call option, "in the money" means that the price of the stock is greater than the strike price. For a put option, "in the money" means that the price of the stock is less than the strike price.


It is also in-the-money for the seller. It means the option has intrinsic value. This may be good news for the buyer and bad news for the seller, but it's the same term.