In The Money Option

An option that has positive intrinsic value, meaning it would be profitable if exercised immediately. The option’s strike price is favorable compared to the current market price of the underlying asset. 

For a call option, it is in the money when the market price of the asset is higher than the strike price. For a put option, it is in the money when the market price is lower than the strike price. This status indicates that the option has real economic value, beyond just time or volatility premium. 

For example, a call option on EUR/USD with a strike price of 1.0800 is in the money if the current rate is 1.1000, because the holder can buy euros at a lower-than-market rate. Similarly, a put option with a strike of 1.1000 would be in the money if the rate drops to 1.0800. 

Being in the money doesn’t guarantee a profit overall, as the option’s premium must also be considered. However, it reflects favorable market conditions relative to the agreed strike and is a key factor in determining whether to exercise or sell the option before expiry.