🎯 ITM, OTM, ATM: Simple Definitions
✅ ITM (In-the-Money)
Call Option: Strike Price < Current Price
Put Option: Strike Price > Current Price
Has intrinsic value. Higher premium but better probability of profit.
⚖️ ATM (At-the-Money)
Call & Put: Strike Price ≈ Current Price
Most liquid options. Balanced premium. Best starting point for beginners.
❌ OTM (Out-of-the-Money)
Call Option: Strike Price > Current Price
Put Option: Strike Price < Current Price
No intrinsic value. Cheaper premium but needs bigger price move to profit.
💡 Real Example: Nifty at ₹22,000
Call Options:
Put Options:
🎯 Which Should You Choose: ITM, ATM, or OTM?
✅ ITM Options
Best For:
- • Conservative traders
- • Higher probability
- • Lower risk
Cost: Higher premium
⚖️ ATM Options
Best For:
- • Beginners (start here!)
- • Balanced approach
- • Most liquid
Cost: Moderate premium
❌ OTM Options
Best For:
- • Aggressive traders
- • Lower cost
- • Big moves expected
Cost: Lower premium
❓ Frequently Asked Questions
What is the difference between ITM and OTM?
ITM (In-the-Money) options have intrinsic value and higher probability of profit. OTM (Out-of-the-Money) options have no intrinsic value, are cheaper, but need bigger price moves to profit.
Which is better for beginners: ITM, ATM, or OTM?
Start with ATM (At-the-Money) options. They offer the best balance of cost, liquidity, and probability. Once comfortable, you can experiment with ITM and OTM.
Can ITM option become OTM?
Yes! If price moves against you, an ITM option can become ATM and then OTM. This is why you should monitor your positions and set stop losses.
Why are OTM options cheaper?
OTM options have no intrinsic value - only time value. They're cheaper because they need price to move significantly to become profitable. Lower probability = Lower premium.
Practice ITM, ATM, OTM Options Risk-Free
Test different strike prices on Zerroday. Learn which ITM/ATM/OTM options work best for your strategy with real Nifty data and AI feedback.
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