A Quick Shortcut to Identify ATM, ITM, and OTM Options

If you're new to options, one of the first things that trips people up is figuring out which options are at the money, in the money, or out of the money. I get it — the option chain can look overwhelming. So let me give you a few shortcuts that will make this click instantly.

Let's use Google as our example. It closed at $314.90 on Friday. So which option strike is at the money? The $315 strike — it's the one closest to the current market price. Simple.

Now, which options are out of the money? If you're on thinkorswim, they actually highlight them for you — they're blacked out on the chain. Out-of-the-money calls are above the current price, and out-of-the-money puts are below it. Out of the money just means the stock price hasn't reached those strike prices yet.

But here's the real shortcut I want to give you, especially if you're not on thinkorswim...