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...
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