When you 'write a covered call' you buy (or already own) 100
shares of stock and sell one call option.
- The option is IN THE MONEY when the stock price is HIGHER than
the strike price of the option
- The option is OUT OF THE MONEY when the stock price is LOWER
than the strike price of the option
- The option is AT THE MONEY (or near the money) when the stock
price is close to the strike price.
- This is a 'rough' definition. 'Near' or 'At' cannot be
defined with accuracy
- A stock trading at 34.99 is clearly at the money (for the 35
- A stock trading at 35.20 is at the money for me, but maybe
not for somebody else.
On 12/7/2010 11:27 AM, Susanlt@gmail.com
Can you explain the difference between an In the Money, Out
of the Money and Near the Money covered call option
Mark D Wolfinger