FX Options Trading: Basics and Strategies | Part 2: Three Important Terms in Options Trading [Naosei Ōhasu]

Profile of Yōhei Oonishi

Financial journalist. After working at a publishing company, he became independent in 1995 and has contributed articles mainly on finance and economics to money magazines, business magazines, weekly magazines, and more. He has covered many interviews with top executives of listed companies as well as analysts and strategists actively working on the market. He is proficient in FX and financial trading in general.

Calling intrinsic value intrinsic value

Because FX option trading involves several specialized terms, many investors may feel it is difficult. However, understanding their meanings can speed up situational awareness and enable prompt investment decisions. This time, we will explain three terms that have particularly important meanings.

There are terms that describe the state of an option’s “intrinsic value”: ① In the Money (ITM), ② At the Money (ATM), and ③ Out of the Money (OTM). Intrinsic value is the difference between the option’s strike price and the market price of the underlying asset (the currency pair). It indicates the real worth of the option at that moment.