An option that has intrinsic value because exercising it would be profitable at the current market price.
An option is said to be in the money (ITM) when it has intrinsic value. A call option is ITM when the underlying’s market price is above the strike price; a put option is ITM when the market price is below the strike price. ITM options are more expensive than out-of-the-money options because they carry intrinsic value in addition to time value, and they have a higher probability of being profitable at expiry.
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