In-the-Money / Out-of-the-Money

Options trading is a widely used tool in traditional stock market investing that allows traders to speculate on stock prices. With the rise of cryptocurrencies, many exchanges now offer options trading for tokens as well.

In-the-money (ITM) and out-of-the-money (OTM) are terms used to describe the type of position a trader takes based on the current price of an asset or cryptocurrency. Options trading enables investors to make predictions about the future price of an asset and potentially profit from it.

Let’s start by understanding what options trading is. In the financial world, an option is a contract that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a specific price (strike price) on or before a certain date (expiration date). This means that traders have the flexibility to participate in the market without actually owning the underlying asset