Deep-In-The-Money

Best Binary Options Brokers 2020:
  • BINARIUM
    BINARIUM

    Best Binary Broker 2020!
    Perfect for Beginners!
    Free Trading Education! Free Demo Acc!
    Get Your Sign-up Bonus Now:

  • BINOMO
    BINOMO

    Trustful broker.

Deep In The Money

What is Deep In The Money?

A deep in the money option has an exercise, or strike price, significantly below (for a call option) or above (for a put option) the market price of the underlying asset. The value of such an option is nearly all intrinsic value and minimal premium.

In The Money Options

Understanding Deep In The Money

The Internal Revenue Service (IRS) defines deep in the money options as any option with a term of less than 90 days which has a strike price which is one strike less than the highest available stock price or an option with a term of more than 90 days with a price less than two strikes than the highest available stock price.

An option is said to be “deep in the money” if it is in the money by more than $10. For options, both a call and a put option can be in the money. Therefore, if a call option is “deep in the money,” it means that the strike price is at least $10 less than the underlying asset, or $10 higher for a put option. For lower-priced equities, $5 or less may be the level necessary to be deep in the money. Such deep in the money options have a very high delta level, meaning that the options will move nearly in lock-step with the underlying asset.

The most important characteristic of this type of option is its considerable intrinsic value. To calculate the value of a call option, one must subtract the strike price from the underlying asset’s market price. For a put option, you would add the strike price to the underlying asset price.

As a call option moves deeper into the money, its delta will approach 100%. At this delta, every point change of underlying asset price results in an equal, simultaneous option price change in the same direction.

For this reason, deep-in-the-money options are an excellent strategy for long-term investors, especially compared to at the money and out of the money (OTM) options. Therefore, investing in the option is similar to investing in the underlying asset, except the option holder will have the benefits of lower capital outlay, limited risk, leverage, and greater profit potential.

Key Takeaways

  • Deep in the money options have strike prices that are significantly above or below the option price.
  • They are excellent investments for long-term investors because they have nearly a 100% delta, meaning that their price changes with every point change in the underlying asset’s price.
  • The downside to deep in the money options is that there is a possibility that the stock may move in the opposite direction and diminish profits or magnify losses.

Some Considerations

Since options cost less to purchase than the underlying asset, deep in the money options allow the investor to profit the same or nearly the same from a stock’s movement as the holders (or short sellers) of the actual stock. While the deep money option carries a lower capital outlay and risk; they are not without risk.

Because options have a limited lifespan, unlike stocks, the investor still needs the underlying stock to move in the desired direction (higher for calls and lower for puts) within the specified period to make a profit.

There is always the possibility that the stock will move in the opposite of the desired direction, making the options less of the money or even out of the money. In that case, intrinsic value declines or completely disappears leaving only the premium, which is at the mercy of time decay.

Example of Deep in the Money

Suppose an investor buys a May call option for stock ABC with a strike price of $175 on 1 Jan 2020. The closing price for ABC was $210 on 1 Jan 2020 and strike prices for May call options on the same day were: $150, $175, $210, $225, and $235. Because the option term is more than 90 days, the call option with a strike price of $150 (two strikes less than $210) is a deep in the money option.

US Search Desktop

We appreciate your feedback on how to improve Yahoo Search. This forum is for you to make product suggestions and provide thoughtful feedback. We’re always trying to improve our products and we can use the most popular feedback to make a positive change!

Best Binary Options Brokers 2020:
  • BINARIUM
    BINARIUM

    Best Binary Broker 2020!
    Perfect for Beginners!
    Free Trading Education! Free Demo Acc!
    Get Your Sign-up Bonus Now:

  • BINOMO
    BINOMO

    Trustful broker.

If you need assistance of any kind, please find self-paced help on our help site. This forum is not monitored for any support-related issues.

The Yahoo product feedback forum now requires a valid Yahoo ID and password to participate.

You are now required to sign-in using your Yahoo email account in order to provide us with feedback and to submit votes and comments to existing ideas. If you do not have a Yahoo ID or the password to your Yahoo ID, please sign-up for a new account.

If you have a valid Yahoo ID and password, follow these steps if you would like to remove your posts, comments, votes, and/or profile from the Yahoo product feedback forum.

  • Голосовать за существующую идею ( )
  • или
  • Опубликовать идею…
  • Горячие идеи
  • Лучшие идеи
  • Новые идеи
  • Раздел
  • Статус
  • Моя обратная связь

Web surfers signed into yahoo, add like to search results

Webs surfers signed into yahoo, can add ‘like’ to search results. Example, I search for new cars. If logged in, I can scan yahoo search results. I click on a new yahoo! icon for a ‘yahoo! shout’, same a ‘like’ feature (i.e., facebook), letting the system know, which of the results I liked.

someone is listing viagra on my web site mwe3.com can you ask them to take it down! It is a music reviews site and not a viagra website!!

someone is listing viagra on my web site mwe3.com can you ask them to take it down! It is a music reviews site and not a viagra website!!

What a stuffed search engine. How about results of the actual item we are looking for.

Results that are actually relevant to a search would make life more enjoyable. Not interested in all the totally unrelated **** you allow to appear as “results”.

US Search Desktop

We appreciate your feedback on how to improve Yahoo Search. This forum is for you to make product suggestions and provide thoughtful feedback. We’re always trying to improve our products and we can use the most popular feedback to make a positive change!

If you need assistance of any kind, please find self-paced help on our help site. This forum is not monitored for any support-related issues.

The Yahoo product feedback forum now requires a valid Yahoo ID and password to participate.

You are now required to sign-in using your Yahoo email account in order to provide us with feedback and to submit votes and comments to existing ideas. If you do not have a Yahoo ID or the password to your Yahoo ID, please sign-up for a new account.

If you have a valid Yahoo ID and password, follow these steps if you would like to remove your posts, comments, votes, and/or profile from the Yahoo product feedback forum.

  • Голосовать за существующую идею ( )
  • или
  • Опубликовать идею…
  • Горячие идеи
  • Лучшие идеи
  • Новые идеи
  • Раздел
  • Статус
  • Моя обратная связь

Web surfers signed into yahoo, add like to search results

Webs surfers signed into yahoo, can add ‘like’ to search results. Example, I search for new cars. If logged in, I can scan yahoo search results. I click on a new yahoo! icon for a ‘yahoo! shout’, same a ‘like’ feature (i.e., facebook), letting the system know, which of the results I liked.

someone is listing viagra on my web site mwe3.com can you ask them to take it down! It is a music reviews site and not a viagra website!!

someone is listing viagra on my web site mwe3.com can you ask them to take it down! It is a music reviews site and not a viagra website!!

What a stuffed search engine. How about results of the actual item we are looking for.

Results that are actually relevant to a search would make life more enjoyable. Not interested in all the totally unrelated **** you allow to appear as “results”.

Best Binary Options Brokers 2020:
  • BINARIUM
    BINARIUM

    Best Binary Broker 2020!
    Perfect for Beginners!
    Free Trading Education! Free Demo Acc!
    Get Your Sign-up Bonus Now:

  • BINOMO
    BINOMO

    Trustful broker.

Binary Options Trading School
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: