Ghoshbhai, I'm a newbie. Can you please explain the meaning of "at money" and "near money".
TY
Hi timepass
I will make it as simple as possible. There is a put and there is a call. In your market, every one 100 point level in Nifty is a strike price level for a put and a call.
The put is used, when you think market goes down. The call is used, when you think market goes up.
Example : Nifty is at spot 6015
Now first the CALLS : ( We use the CALL, because we think market goes UP )
Itm call options = In the money CALL options are all CALLS, which have there strike prices under 6000. So all CALL options, which have there strike price at or under 5900 are in the money CALL options, as market already has touched there strike price and is higher.
Atm options = At the money options are all options ( CALLS and PUTS ! ), which have a strike price at 6000. CALL 6000 and PUT 6000 are at the money, as market stays on that level.
Otm options = Out of the money CALL options are also named near the money options and are all those CALLS, which have a strike price over 6000. So, all CALL options which have there strike price at and over 6100 are out of the money CALLS, as market not has touched there strike price.
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And now the PUTS : ( We use the PUT, when we think market goes DOWN )
Itm put options = In the money PUT options are all PUTS, which have there strike prices over 6000. So all PUT options, which have there strike price at or over 6100 are in the money PUT options, as market already has touched there strike price and is lower.
Atm options = At the money options are all options ( PUTS and CALLS ! ), which have a strike price at 6000. PUT 6000 and CALL 6000 are at the money, as market stays on that level.
Otm options = Out of the money PUT options are also named near the money options and are all those PUTS, which have a strike price under 6000. So, all PUT options which have there strike price at and under 5900 are out of the money PUT options, as market not has touched there strike price.
Take care
DanPickUp