Editing Moneyness (section)

==Example==
Suppose the current stock price of [[IBM]] is $100. A [[call option|call]] or [[put option]] with a strike of $100 is at-the-money. A [[call option|call]] with a strike of $80 is in-the-money (100 &minus; 80 = 20 &gt; 0). A [[put option]] with a strike at $80 is out-of-the-money (80 &minus; 100 = &minus;20 &lt; 0). Conversely, a call option with a $120 strike is out-of-the-money and a put option with a $120 strike is in-the-money.

The above is a traditional way of defining ITM, OTM and ATM, but some new authors find the comparison of strike price with current market price meaningless and recommend the use of Forward Reference Rate instead of Current Market Price. For example, a put option will be in the money if the strike price of the option is greater than the Forward Reference Rate.<ref>{{cite book|last1=Chugh|first1=Aman|title=Financial Derivatives- The Currency and Rates Factor|date=2013|publisher=Dorling Kindersly (India) Pvt Ltd, licensees of Pearson Education in South Asia|location=New Delhi|isbn=978-81-317-7433-5|page=60|edition=First|url=http://icai.org/cmii_uploads1/c813b9f80c922bc3757e231a70dd1c7e.ppt|archive-url=https://archive.today/20140818015727/http://icai.org/cmii_uploads1/c813b9f80c922bc3757e231a70dd1c7e.ppt|url-status=dead|archive-date=August 18, 2014|access-date=18 August 2014}}</ref>