ATM, ITM, OTM
Understanding where your option stands relative to the current market price.
ITM
In The Money
The option already has value. If you exercised it right now, you'd get something.
ATM
At The Money
Strike price equals current price. Right at the boundary.
OTM
Out of The Money
No value right now. The market hasn't reached your strike yet.
For Call options: strike below market = ITM, strike at market = ATM, strike above market = OTM
For Put options: strike above market = ITM, strike at market = ATM, strike below market = OTM
ITM options are more expensive because they already have value.
OTM options are cheaper because the market hasn't reached the strike yet — they might expire worthless.
ATM options are in the middle — they have the highest "time value" and are the most commonly traded.