Define: Deep In The Money

UK Accounting Glossary

Definition: Deep In The Money



Advertisement



Full Definition of Deep In The Money


A deep in the money option is one that is presently very profitable. An option is commonly said to be deep in the money when the exercise (strike) price of the option is extremely favorable relative to the current market price of the underlying security. The more profitable the position, the further deep in the money the option is said to be. When the option is close to expiration, it is said to be deep in the money when the spread between the strike price and the current underlying asset’s market price is sufficiently great that the chance the deep in the money option will no longer be in the money at expiration is very low. Deep in the money options tend to stay in the money, if not deep in the money. A call option is deep in the money when the strike price is well below the current market price of the underlying asset. A put option is deep in the money when the strike price is well above the current market price of the underlying asset.


Advertisement




Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/deep-in-the-money/
Modern Language Association (MLA):
Deep In The Money. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. February 22, 2020 https://payrollheaven.com/define/deep-in-the-money/.
Chicago Manual of Style (CMS):
Deep In The Money. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/deep-in-the-money/ (accessed: February 22, 2020).
American Psychological Association (APA):
Deep In The Money. PayrollHeaven.com. Retrieved February 22, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/deep-in-the-money/

Definition Sources


Definitions for Deep In The Money are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • BusinessDictionary.com
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 7th February 2020.