Describing a call or put option in which the exercise price is the same (or very nearly the same) as the current market price of the underlying asset.
The Black-Scholes Option Pricing Model, developed by Fischer Black and Myron Scholes, is a mathematical model used to determine the fair value of options by incorporating factors such as volatility, interest rates, stock prices, exercise prices, and time until expiration.
The exercise price, also known as the strike price or striking price, is the predetermined price per share at which an option holder can buy (in the case of a call option) or sell (in the case of a put option) the underlying security.
A Guarantee Letter is a document issued by a commercial bank that ensures payment of the exercise price of a client's put option if or when an assignment notice is presented to the option seller (writer).
Out of the Money (OTM) is a term used to describe an options contract that currently holds no intrinsic value. Specifically, a call option is OTM if the strike price is higher than the current market value of the underlying asset, whereas a put option is OTM if the strike price is lower than the current market value of the underlying asset.
The strike price, also known as the exercise price, is the predetermined price at which the owner of an option can buy or sell the underlying asset before or at the expiration date.
