Today, Dr. Jim explains the term he coined at tastytrade: MONEYNESS. Turns out, there are three types of moneyness that we want to be aware of: at-the-money (ATM), out-of-the-money (OTM), and in-the-money (ITM). Anthony learns an option will always be one of these three depending on the relationship between the strike price and the stock price. In working through the moneyness of calls and puts, he is reminded to view moneyness from the perspective of the long side of the contract, and that what is good for the long is not good for the short, and vice versa.
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