In the Money

From Reuters Financial Glossary

An option is described as being in the money when the current price of the underlying instrument is above the strike or exercise price for a call, and below the strike price for a put. For example, The shares of Company A are trading at £2.20 each. A trader decides to write an option on the shares, giving the buyer the right to buy the shares of Company A at £2.40 each. That is a call option, because the buyer has the right to “call�?� or buy the shares at £2.40 each. The exercise, or �??strike�?� price, for the option is £2.40. If the price of the underlying shares rises to £2.50 then the option is �??in the money” and the holder will exercise the option because the strike price is below the market price of the shares. Options can also be described as being deep in the money when they are likely to expire in the money.

See also: Out of the Money, At the Money