When is a call option considered in-the-money (ITM)?

A call option is considered in-the-money (ITM) when the strike price is less than the market price of the underlying asset. This situation allows the holder of the call option to exercise their right to purchase the asset at a price lower than its current market value, thereby realizing a potential profit. The ITM status of a call option indicates that it has intrinsic value, as the option holder can benefit financially from exercising the option.

When the strike price is below the market price, it creates a favorable condition for the holder, as they can acquire the asset at a lower predetermined price compared to the market. In contrast, other scenarios, such as when the market price aligns with the strike price or is lower, do not provide any financial advantage to the call option holder. Thus, understanding this distinction is essential for identifying profitable trading opportunities in the options market.